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The Restaurant Industry Strengthens in March

May 13, 2011 By: Alissa Ponchione


The restaurant industry is growing, albeit slowly, according to the National Restaurant Association’s Restaurant Performance Index (RPI), a monthly index that tracks the health and outlook for the U.S. restaurant industry.

The RPI measures the health of the restaurant industry in relation to the steady-state level of 100. Values above 100 indicate a period of expansion, while values below 100 represent periods of contraction.

In March, the RPI stood at 101, a 0.3% increase from February and the third gain in the last four months, as well as the sixth time in the last seven months that the RPI stood above 100, signifying growth.

Yet, as the industry strengthens, restaurant operators aren’t as positive about the economy, with only 32% expecting economic conditions to improve in the next six months.

Under the Current Situation Index, which measures trends in same-store sales, traffic, labor and capital expenditures, the RPI stood at 100.2 in March, an increase of 0.8% from February and the first time in 43 months that the Current Situation Index rose above 100.

Restaurant operators reported a 52% same-store-sales gain between March 2010 and March 2011, up from 49% in February and the strongest level since August 2007, while 31% reported a same-store-sales decline in March, down from 37% in February. Also, 55% of restaurant operators reported an increase in customer traffic between March 2010 and March 2011, up from 41% in February; 32% of operators reported a traffic decline, down from 39% in February.

The Expectations Index, which measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 101.7, down from February’s level of 101.9. However, this is the eighth month in a row that the Expectations Index stood above 100, which indicates expansion.

In fact, restaurant operators remain optimistic, with 50% expecting high sales in six months, up from 48% in February, while only 13% of operators expect their sales volume to be lower in six months compared with 12% from February.

Restaurant operators are planning to spend more, with 53% planning a capital expenditure for equipment or remodeling. This coupled with a positive outlook in staffing gains — 26% of operators will increase staffing in the next six months —show that operators are optimistic about the future.

Although restaurant operators are hopeful about sales growth in the upcoming months, they’re also cautious about the economy’s recovery, indicating that recovery in the restaurant industry will be slow but steady.
 


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