Restaurant Performance Index (RPI): Definition, How It Works, and Industry Insights

The restaurant performance index (RPI) is a monthly index developed by the National Restaurant Association to gauge the status and outlook of the United States’ restaurant industry. It serves as a critical barometer, amalgamating observed trends with future expectations.

The RPI relies on a monthly survey of approximately 400 restaurateurs nationwide. This survey assesses key areas such as same-store sales, customer traffic, labor statistics, and capital expenditures. Introduced in 2002, the index comprises two primary components: the current situation index and the expectations index.

The current situation index measures changes in same-store sales, customer traffic, total employment figures, average hours worked by employees, and capital spending. These metrics are compared to the corresponding period in the previous year, offering insights into the industry’s current state.

Conversely, the expectations index forecasts the industry’s performance over the next six months. It includes projections for same-store sales, employment changes, capital spending plans, and overall business conditions. Both components are equally weighted in calculating the overall RPI.

Each component presents its data in an index format relative to a baseline value of 100. Values above 100 indicate industry expansion, while values below 100 suggest contraction.

The National Restaurant Association provides much of the RPI data for free on its website, with more detailed breakdowns available through a subscription service called Restaurant TrendMapper.

The RPI has witnessed fluctuations over the years, often correlating with broader economic trends. For example, during the 2008-09 financial crisis and the COVID-19 pandemic in early 2020, the index reflected significant contractions in the restaurant sector. However, as COVID-19 restrictions eased and consumer demand rebounded, the RPI exhibited a notable recovery, signaling a resurgence in the industry.

Yes, the RPI specifically tracks the health and outlook of the U.S. restaurant industry. Similar indices may exist for other countries’ restaurant sectors.

The RPI is released on the last business day of each month by the National Restaurant Association.

While the RPI provides valuable insights into industry conditions, it is considered a coincident indicator rather than a predictive one for investment purposes. Therefore, it is not extensively used by investment analysts to forecast movements in restaurant stocks.

The National Restaurant Association offers much of the RPI data for free on its website, with more detailed breakdowns available through a subscription service called Restaurant TrendMapper.