The National Restaurant Association’s Restaurant Performance Index (RPI) for January was the highest since August. The index, which “tracks the health of and outlook for the U.S. restaurant industry,” was driven higher by a sharp increase in its expectations component (EC). The EC is based on four, forward-looking, restaurant industry indicators – same-store sales, staffing, capital expenditures and business conditions.

The EC stood at 101.6 in January, 1.3 points higher than in December 2012, and at its highest level since May. The primary driver of the higher EC was operators’ expectations of same-store sales, which stood at 102.9 in January, its highest level since September’s 103.4.

It should be noted that the index for same-store sales expectations has been 3 points or more above 100 in every month except one since late 2011. An index value above 100 is indicative of growth in the restaurant sector.

While we understand the optimism of operators, the point must be made that operators’ optimistic expectation of sales over the past 15 months have, so far, not translated into improved performance. So, while we always prefer optimistic expectations, it appears this one must be taken with a grain or two of salt until actual performance improvement becomes apparent and a bit more permanent.

NRA national restaurant association sales

All three other EC factors were also above 100 with the most noteworthy being expectations of business conditions, which improved 1.2 points from December to reach 101.0. That’s the highest level since May and its first foray above 100 since September.

The RPI’s current situation component improved to 99.7 in January, 0.6 points higher than in December, but still not above the 100 dividing line between contraction and growth. The current index of same-store sales improved to 100.7 from 100.4, while the capital expenditures component moved above 100 (to 100.3) for the first time since October 2007. Meanwhile, the labor component, which tracks employee numbers and hours, remained low at 98.5; and the customer traffic component, though 1 point higher at 99.3, continued to drag the broader indexes lower.

Restaurant operators’ expectations for the next six months improved in the most recent survey, with 46% expecting sales volume to increase in the next six months, and only 17% expecting sales to fall during that time period. Those figures compare to 37% and 16%, respectively, last month. They also represent the largest difference between the higher vs. lower percentages since October.

Overall, 30% of operators expect economic conditions to improve over the next six months, while 20% expect them to get worse. That’s close to a perfect reversal of last month’s 17% better, 29% worse results. It’s also far better than last fall’s results of roughly 40% expecting worse and 20% expecting better conditions.