The outlook for the restaurant industry remained positive for the months ahead, as the National Restaurant Association's Restaurant Performance Index (RPI) remained above 100 in May.
The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 101.4 in May, the seventh consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators.
"Despite a soft patch in the overall economy, restaurant operators reported positive same-store sales for the 12th consecutive month," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NAR. "Looking forward, restaurant operators remain generally optimistic about sales growth in the months ahead, though they are somewhat less bullish about the direction of the economy."
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.8 in May – down 0.2 percent from April's level of 101.0. Despite the decline, the index remained above 100 for the seventh consecutive month.
Restaurant operators reported positive same-store sales for the 12th consecutive month in May, with sales results similar to their April performance. Sixty-one percent reported a same-store sales gain between May 2011 and May 2012, up from 57 percent who reported a sales gain in April. Meanwhile, 28 percent of operators reported lower same-store sales in May, up from 25 percent who reported similarly in April.
While sales results remained positive, operators reported softer customer traffic results in May. Forty-two percent reported higher customer traffic levels between May 2011 and May 2012, down from 46 percent who reported positive traffic in April. In comparison, 39 percent of operators reported lower customer traffic levels in May, up from 30 percent in April.
Restaurant operators reported a slight uptick in capital spending. Forty-six percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up slightly from 44 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 ninth consecutive month above 100.
Operators are generally optimistic that their sales levels will improve in the months ahead. Forty-eight percent expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 52 percent who reported similarly last month. In comparison, only eight percent expect their sales volume in six months to be lower than it was during the same period in the previous year, unchanged from last month.
Operators are somewhat less bullish about the direction of the overall economy. Thirty-six percent said they expect economic conditions to improve in six months, up slightly from 34 percent last month. However, 19 percent of operators said they expect economic conditions to worsen in the next six months, up from 10 percent last month and the highest proportion in seven months.
For the eighth consecutive month, operators reported positive expectations for staffing growth in the months ahead. Twenty percent plan to increase staffing levels in six months (compared to the same period in the previous year), while only 8 percent said they expect to reduce staffing levels in six months.
Also, operators continue to plan for capital spending in the coming months. Fifty-five percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 52 percent who reported similarly last month.
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