Restaurant Industry Outlook Remains Positive as Restaurant Performance Index Stood Above 100 for 6th Consecutive Month

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May 31, 2012, 11:05 ET

Restaurant operators reported positive same-store sales for the 11th consecutive month; Operators are optimistic about sales growth and the economy in the months ahead

WASHINGTON, May 31, 2012 /PRNewswire-USNewswire/ -- The outlook for the restaurant industry remained positive for the coming months, as the National Restaurant Association's Restaurant Performance Index (RPI) stood well above 100 in April. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.6 in April, down 0.6 percent from the strong level of 102.2 registered in March. Despite the decline, April represented the sixth consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

"Although the Restaurant Performance Index dipped somewhat in April, it remained solidly in positive territory," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Restaurant operators reported positive same-store sales for the 11th consecutive month, and a majority of them expect business to continue to improve in the months ahead."

The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. 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. The Index consists of two components – the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.0 in April – down 1.0 percent from a level of 102.0 in March. Despite the decline, the Current Situation Index remained above 100 for the sixth consecutive month, which signifies expansion in the current situation indicators.

Restaurant operators reported positive same-store sales for the 11th consecutive month in April, though sales results were somewhat softer than March. Fifty-seven percent of restaurant operators reported a same-store sales gain between April 2011 and April 2012, down from 65 percent who reported a sales gain in March. Meanwhile, 25 percent of operators reported lower same-store sales in April, up from 21 percent who reported similarly in March.

Restaurant operators also reported somewhat softer customer traffic results in April. Forty-six percent of restaurant operators reported higher customer traffic levels between April 2011 and April 2012, down from 55 percent who reported positive traffic in March. In comparison, 30 percent of operators reported lower customer traffic levels in April, up from 24 percent in March.

Along with softer sales and traffic levels, restaurant operators reported somewhat lower capital spending levels. Forty-four percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 48 percent who reported similarly last month.

The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 102.2 in April – down slightly from a 15-month high of 102.4 registered in March. April also represented the eighth consecutive month that the Expectations Index stood above 100, which signifies a positive outlook among restaurant operators for business conditions in the coming months.

For the fifth consecutive month, a majority of restaurant operators expect their sales to be higher in the months ahead. Fifty-two percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from the previous four months. In comparison, only eight percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down slightly from nine percent last month.

Restaurant operators also remain generally optimistic about the direction of the overall economy. Thirty-four percent of restaurant operators said they expect economic conditions to improve in six months, down slightly from 38 percent last month. Meanwhile, only 10 percent of operators said they expect economic conditions to worsen in the next six months, compared to 12 percent who reported similarly last month.

For the seventh consecutive month, restaurant operators reported positive expectations for staffing growth in the months ahead. Twenty-six percent of restaurant operators plan to increase staffing levels in six months (compared to the same period in the previous year), while only 8 percent said they expect to reduce staffing levels in six months.

Along with a positive outlook for sales and the economy, restaurant operators also continue to plan for capital spending in the months ahead. Fifty-two percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 56 percent who reported similarly last month.

The RPI is based on the responses to the National Restaurant Association's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor, and capital expenditures. The full report and a video summary are available online at http://www.restaurant.org/research/economy/rpi.

The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based service that provides detailed analysis of restaurant industry trends.

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 970,000 restaurant and foodservice outlets and a workforce of nearly 13 million employees. We represent the industry in Washington, D.C., and advocate on its behalf. We operate the industry's largest trade show (NRA Show May 18-21, 2013, in Chicago); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart, including the National ProStart Invitational April 19-21, 2013, in Baltimore, Md.); as well as the Kids LiveWell program promoting healthful kids' menu options. For more information, visit www.restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.