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Restaurant index rises as same-store sales improve
July 2, 2008
WASHINGTON, D.C. — Restaurant industry performance improved in May as the National Restaurant Association's comprehensive index of restaurant activity rose for the second consecutive month.
The Association's Restaurant Performance Index — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 98.6 in May, up 0.2 percent from April's level.
"The May increase in the Restaurant Performance Index was driven by a solid gain in the current situation component," said Hudson Riehle, senior vice president of research and information services for the association. "Each of the four current situation indicators posted improvements in May, led by the first positive same-store sales performance in three months."
But operators haven't improved their outlook.
"Though restaurant operators reported an improvement in their current performance, their outlook for sales and the economy in the months ahead grew more pessimistic," Riehle added. "Only 12 percent of restaurant operators expect economic conditions to improve in six months, the lowest level in the six-year history of the Restaurant Performance Index."
Restaurant operators reported positive same-store sales in May for the first time in three months. Forty-three percent of restaurant operators reported a same-store sales gain between May 2007 and May 2008, up from 35 percent who reported a sales gain in April. Forty-two percent of operators reported a same-store sales decline in May, down from 50 percent who reported similarly in April.
Despite the positive sales results, restaurant operators continued to report negative customer traffic levels in May. Thirty-three percent of restaurant operators reported an increase in customer traffic between May 2007 and May 2008, up from 24 percent who reported similarly in April. Forty-five percent of operators reported a traffic decline in May, down from 55 percent who reported negative traffic in April.
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 98.3 in May — down 0.6 percent from April and its lowest level on record. In addition, May represented the seventh consecutive month in which the Expectations Index stood below 100.
Restaurant operators remain pessimistic about sales growth in coming months. Twenty-nine percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), matching the proportion who reported similarly last month.
Thirty-seven percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period last year, up from 34 percent who reported similarly last month.
Restaurant operators also grew more pessimistic about the direction of the economy. Forty-five percent of operators said they expect economic conditions to worsen in six months, up from 42 percent who reported similarly last month.
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