Some Good News for Restaurants

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The National Restaurant Association released its RPI for July 2009 and it contains some reason for optimism that maybe restaurants have turned the corner on the recession. RPI has nothing to do with college basketball rankings in this case. RPI means Restaurant Performance Index. The RPI has been under the business-as-usual 100 number for nearly two years, but narrowed the gap to 98.1 from 97.8 in June.

So while things are not yet improving for restaurants in this economy, the industry decline seems to be slowing, which could be the first step to a turnaround. Factors that go into the RPI are same-store sales, traffic, labor, capital expenditures and future expectations. As we know a lot of beer is sold in the on-premise environment. All of it for many brewpubs; and between 30 and 40% for many packaging breweries. We already see a trend of people buying craft beer for new occasions of entertaining friends at home emerging in this economy, which may be a permanent change in neighborhood behavior. As restaurants come back, we will likely see improved off-premise and on-premise sales, or, in the words of former President George W. Bush, “We ought to make the pie higher.”

Paul Gatza

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