WASHINGTON, June 28, 2013 /PRNewswire-USNewswire/ -- Buoyed by stronger same-store sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index (RPI) hit a 14-month high in May. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.8 in May, up 0.9 percent from April and the third consecutive monthly gain. May also represented the third straight month that the RPI surpassed the 100 level, which signifies expansion in the index of key industry indicators.
"The May increase in the Restaurant Performance Index was driven by broad-based gains in the current situation indicators, most notably positive same-store sales and customer traffic results," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. "In addition, restaurant operators remain optimistic about continued sales growth 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 101.6 in May – up 1.6 percent from a level of 100.1 in April. May represented the strongest Current Situation Index reading since March 2012, and signifies expansion in the current situation indicators.
A majority of restaurant operators reported higher same-store sales in May, and the overall results were a solid improvement over the April performance. Sixty-three percent of restaurant operators reported a same-store sales gain between May 2012 and May 2013, up from 49 percent who reported higher sales in April. Meanwhile, just 23 percent of operators reported a decline in same-store sales in May, down from 33 percent in April.
Restaurant operators also reported a net gain in customer traffic levels in May. Forty-seven percent of restaurant operators reported higher customer traffic levels between May 2012 and May 2013, while 30 percent of operators said their traffic declined. In April, 36 percent of operators reported an increase in customer traffic, while 40 percent reported lower traffic levels.
Along with the positive sales and traffic results, restaurant operators reported an increase in capital spending activity. Fifty-two percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 47 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 102.0 in May – the strongest level in 12 months. Each of the four expectations indicators stood above 100 for the fifth consecutive month, which indicates broad-based optimism for business conditions in the coming months.
Restaurant operators are increasingly optimistic about their sales prospects in the months ahead. Forty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 41 percent last month and the highest level in nearly a year. In addition, only 8 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, the lowest level in 12 months.
Restaurant operators are not quite as bullish about the direction of the overall economy. Thirty percent of restaurant operators said they expect economic conditions to improve in six months, essentially unchanged from 28 percent who reported similarly last month. Fifteen percent of operators said they expect economic conditions to worsen in the next six months, compared to 13 percent last month.
Restaurant operators continue to plan for capital spending in the months ahead. Fifty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 59 percent who reported similarly last month.
Restaurant operators are also generally positive on the staffing front in the coming months. Twenty-one percent of operators plan to increase staffing levels in six months (compared to the same period in the previous year), while just 8 percent said they plan to cut positions.
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 video summary are 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 17-20, 2014, 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 www.restaurant.org and find us on Twitter @WeRRestaurants, Facebook and YouTube.
SOURCE National Restaurant Association