WASHINGTON, May 31, 2013 /PRNewswire-USNewswire/ -- Driven by higher same-store sales and an improving outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) hit a 10-month high in April. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.0 in April, up 0.4 percent from a level of 100.6 in March. In addition, April represented the third time in the last four months that the RPI topped the 100 level, which signifies expansion in the index of key industry indicators.
"Growth in the Restaurant Performance Index was due largely to restaurant operators' healthier outlook for the business environment in the coming months," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "In particular, there was a dropoff in the proportion of operators who expect conditions to worsen in the months ahead, which suggests a broadening of the perspective that the expansion is firmly entrenched."
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 100.1 in April – up 0.3 percent from a level of 99.8 in March. April represented the first time in eight months that the Current Situation Index rose above 100, which signifies expansion in the current situation indicators.
Restaurant operators reported stronger same-store sales results in April. Forty-nine percent of restaurant operators reported a same-store sales gain between April 2012 and April 2013, up from 44 percent who reported higher sales in March. Meanwhile, 33 percent of operators reported a drop in same-store sales in April, down from 37 percent in March.
While overall sales were positive in April, restaurant operators reported a net decline in customer traffic for the fifth consecutive month. Thirty-six percent of restaurant operators reported higher customer traffic levels between April 2012 and April 2013, while 40 percent of operators said their traffic declined. In March, 34 percent of operators reported an increase in customer traffic, while 42 percent reported lower traffic levels.
Restaurant operators reported a slight dip in capital spending activity from recent months. Forty-seven percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 51 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 101.9 in April – up 0.5 percent from March and the highest level in 11 months. Each of the four expectations indicators stood above 100 for the fourth consecutive month, which indicates a firming of optimism for business conditions in the months ahead.
Restaurant operators remain generally optimistic that their sales will improve in the coming months. Forty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 44 percent last month. However, only 10 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 from 15 percent last month and the lowest level in 11 months.
Similarly, a smaller proportion of restaurant operators are bearish about the economy in the months ahead. Only 13 percent of operators said they expect economic conditions to worsen in the next six months, down from 20 percent last month and the lowest level in 12 months. Meanwhile, 28 percent of restaurant operators said they expect economic conditions to improve in six months, down from 32 percent who reported similarly last month.
Restaurant operators reported an uptick in plans for capital spending in the months ahead. Fifty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 55 percent who reported similarly last month.
Restaurant operators are also somewhat more optimistic about staffing growth in the months ahead. Twenty-two percent of operators plan to increase staffing levels in six months (compared to the same period in the previous year), while just 10 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 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.
SOURCE National Restaurant Association