What Is the Restaurant Performance Index (RPI)?

The Restaurant Performance Index (RPI) is a monthly index that tracks the health and outlook of the U.S. restaurant industry. The National Restaurant Association, the world’s largest food-service trade group, publishes the index results on the last business day of each month.

Key Takeaways

  • The National Restaurant Association's Restaurant Performance Index (RPI) is a monthly composite index that tracks the restaurant industry in the U.S.
  • Launched in 2002, the RPI is released on the last business day of each month and measures both observed trends and industry outlook.
  • RPI Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

Understanding the Restaurant Performance Index (RPI)

The Restaurant Performance Index (RPI) reflects the results of a monthly survey of roughly 400 restaurateurs nationwide. The survey gauges answers in key areas such as same-store sales, traffic, labor, and capital expenditures.

The index, which was launched in 2002, is comprised of two equally-weighted components: the Current Situation Index and the Expectations Index. The Current Situation Index measures changes in same-store sales, customer traffic, the total number of total employees and their average hours worked, as well as capital spending. Each metric is tracked versus the year-ago month.

The Expectations Index, meanwhile, reflects a six-month outlook for same-store sales relative to the same period the previous year; an outlook for the changes in the number of employees needed in the next six months; capital spending plans; and business operators’ feelings about overall business conditions.

Each component breaks down survey results into an index value that is measured in relation to a steady-state of 100. That is, readings below 100 indicate business contraction, 100 is the status-quo, and index values above 100 signal expansion.

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

RPI Performance

The RPI has undergone a series of expansions and contracts, often coincident with the broader economy and stock market. Below is a figure depicting the value of the Index from 2004 through April of 2021. The chart makes clear that the restaurant sector was hit particularly hard during the 2008-09 financial crisis and again in early 2020 as the COVID-19 pandemic shuttered many businesses, especially those requiring in-person attendance. Interestingly, the RPI shows a massive recovery leading into the second half of 2021 as COVID-19 restrictions ease and pent-up demand is satisfied by dining out.

RPI 2004-2021
RPI 2004-2021.

Pros and Cons of the Restaurant Performance Index

The Restaurant Performance Index (RPI) is one of several industry-performance metrics published by the National Restaurant Association. The index leverages statistical methods and offers useful insights into current business conditions and near-term expectations. Restaurant operators use the index to assist with predictions that inform hiring and expansion decisions.

While investment analysts watch the index fairly closely, few use it to it predict movements for restaurant stocks. For investment purposes, the index is considered to be a coincident indicator, as opposed to a predictive one. For this reason, analysts and investors tend to use additional methods to predict returns for restaurant stocks.