Featured Indicator: Restaurant Performance Index

As we continue to navigate the reopening of the economy, understanding the COVID-19 pandemic’s impact on industries is critical for moving us towards recovery. Across the country the hospitality industry was particularly impacted by the stay at home orders and social distancing measures that were used to slow the spread of the virus. While many restaurants that turned to take out and delivery to get by are now open for limited outdoor and indoor dining, ongoing capacity restrictions and fear of a second virus wave point towards a potentially tepid recovery for this industry.

The National Restaurant Association publishes a Restaurant Performance Index that can be used to illustrate the contraction in this industry on a national level, and to track its recovery.

Index Components

According to the National Restaurant Association, the Restaurant Performance Index measures the overall health of the U.S. restaurant industry. This composite index is based on responses to the National Restaurant Association’s monthly Restaurant Industry Tracking Survey, which is conducted among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. An index value above 100 indicates a period of expansion while a value below 100 signals contraction.

This index is comprised of two equally- weighted components:

The Current Situation Index is a composite based on four ‘recent-period’ restaurant industry indicators: same-store sales, customer traffic, labor, and capital expenditures.

The Expectations Index is a composite index based on four ‘forward-looking’ restaurant industry indicators: same store sales outlook, future staffing, capital expenditure expectations, and business conditions outlook.

What is the data telling us?

As of April 2020, the Restaurant Performance Index was at 94.9, down from 101.8 at the beginning of the year. Unsurprisingly, both components (the Current Situation Index and the Expectations Index) indicated a period of contraction for the industry. The most recent Current Situation Index was 92.8 and the most recent Expectations Index was 97.1.

Source: NRA

The Restaurant Performance Index is at its lowest levels since its inception. As a comparison, during the 2008-2009 financial crisis, index levels did not drop below 96.0.

Why is this important?

Though the data release lags by two months this is a good macroeconomic indicator that can be used to track the health of the restaurant industry, the magnitude of the industry’s contraction, and the pace of the industry’s recovery back to a place of expansion. For more information, see the National Restaurant Association.


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