WASHINGTON, D.C. — The outlook for the restaurant industry was decidedly more optimistic in March, as the National Restaurant Association's comprehensive index of restaurant activity posted a solid increase.
The Association's Restaurant Performance Index (RPI) — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 101.9 in March, up 1.1 percent from February and its strongest gain in 17 months. In addition, the RPI remained above 100 for the 47th consecutive month, which represents expansion in the Association's composite index of eight key industry indicators.
"Growth in the Restaurant Performance Index to a 12-month high was fueled by broad-based gains in March, with seven out of eight indicators registering improvements from their February levels," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "Trends in the current situation indicators were particularly encouraging, with operators reporting solid improvements over the softer performances in the first two months of the year."
The March RPI increase was driven by solid reports in the current situation component of the index, which measures current trends in same-store sales, traffic, labor and capital expenditures. It stood at 101.1 in March — up a strong 2.1 percent from its February level. The solid March performance came on the heels of two consecutive months below 100, which signifies contraction in the current situation indicators.
For the first time in three months, a majority of restaurant operators reported an increase in same-store sales. Fifty-five percent of restaurant operators reported a same-store sales gain between March 2006 and March 2007, up from 38 percent who reported sales gains in January and February. Twenty-eight percent of operators reported a same-store sales decline in March, down from 47 percent who reported similarly in February.
The Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 102.6 in March — up 0.2 percent from February and its strongest level in 12 months.
Other findings include:
- 45 percent of restaurant operators reported an increase in customer traffic between March 2006 and March 2007 — up from 32 percent in February.
- 32 percent of operators reported a traffic decline in March, down from 48 percent who reported similarly in February.
- 53 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the strongest level in six months.
- 55 percent of restaurant operators expect to have higher sales in six months, up from 51 percent who reported similarly last month.
- 12 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period the previous year.
- 61 percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months — the strongest level in 12 months.
- 33 percent of operators expect economic conditions to improve in six months — down from 36 percent who reported similarly last month.
- 15 percent of operators said they expect economic conditions to worsen in six months, while 52 percent expect economic conditions to remain about the same.
