WASHINGTON (PRNewswire-USNewswire) — Buoyed by positive sales results and a more optimistic outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) rose above 100 in March. The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 100.6 in March, up 0.7 percent from February's level of 99.9. March represented the second time in the last three months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
"The Restaurant Performance Index gain was driven by stronger same-store sales results in March, with comparisons aided by the Easter holiday occurring during the month," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "In addition, restaurant operators are somewhat more confident in the economy and a majority plan to make a capital expenditure in the next six months."
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 99.8 in March – up 1.5 percent from February's level. Although restaurant operators reported net positive same-store sales results in March, softness in the customer traffic and labor indicators outweighed the performance, which resulted in an overall Current Situation Index reading below 100 for the seventh consecutive month.
After reporting a same-store sales decline for the first time in 21 months, restaurant operators bounced back in March with a modest net gain. Forty-four percent of restaurant operators reported a same-store sales gain between March 2012 and March 2013, while 37 percent of operators reported lower sales. In February, only 33 percent of operators reported higher same-store sales, while 48 percent reported a sales decline.
While overall sales were positive in March, restaurant operators reported a net decline in customer traffic for the fourth consecutive month. Thirty-four percent of restaurant operators reported higher customer traffic levels between March 2012 and March 2013, while 42 percent of operators said their traffic declined. In February, 24 percent of operators reported an increase in customer traffic, while 53 percent reported lower traffic levels.
Despite the mixed sales and traffic results, restaurant operators reported an increase in capital spending activity. Fifty-one percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, up 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 101.4 in March – unchanged from February's level. Each of the four expectations indicators stood above 100 for the third consecutive month, which suggests restaurant operators are optimistic about business conditions in the coming months.
Restaurant operators remain generally optimistic that their sales will improve in the months ahead. Forty-four percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 41 percent last month. Meanwhile, 15 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, essentially unchanged from 14 percent last month.
Restaurant operators are somewhat more bullish that the economy will improve in the coming months. Thirty-two percent of restaurant operators said they expect economic conditions to improve in six months, up from 25 percent last month and the highest level in 10 months. However, 20 percent of operators said they expect economic conditions to worsen in the next six months, unchanged from the previous two months.
A majority of restaurant operators have plans for capital spending in the months ahead. Fifty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 57 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 is available online at Restaurant.org/RPI.
The RPI is released on the last business day of each month, and a more detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based web site 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 980,000 restaurant and foodservice outlets and a workforce of more than 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); as well as the Kids LiveWell program promoting healthful kids' menu options. For more information, visit Restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.