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 NRA. "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 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.
Operators reported stronger same-store sales results in April. Forty-nine percent 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 reported a drop in same-store sales in April, down from 37 percent in March.
While overall sales were positive in April, operators reported a net decline in customer traffic for the fifth consecutive month. Thirty-six percent reported higher customer traffic levels between April 2012 and April 2013, while 40 percent said their traffic declined. In March, 34 percent of operators reported an increase in customer traffic, while 42 percent reported lower traffic levels.
Operators reported a slight dip in capital spending activity from recent months. Forty-seven percent said 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, stood at 101.9 in April — up 0.5 percent from March and the highest level in 11 months.
Operators remain generally optimistic that their sales will improve in the coming months. Forty-one percent 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 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 operators are bearish about the economy in the months ahead. Only 13 percent 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 said they expect economic conditions to improve in six months, down from 32 percent who reported similarly last month.
Respondents reported an uptick in plans for capital spending in the months ahead. Fifty-nine percent 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.
Finally, restaurant operators are also somewhat more optimistic about staffing growth in the months ahead. Twenty-two percent 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.
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