Restaurant operators optimistic about sales growth

May 1, 2013

Buoyed by positive sales results and a more optimistic outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) rose above 100 in March.

The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 100.6 in March, up 0.7 percent from February's level of 99.9. March represented the second time in the last three months that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

"The Restaurant Performance Index gain was driven by stronger same-store sales results in March, with comparisons aided by the Easter holiday occurring during the month," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "In addition, restaurant operators are somewhat more confident in the economy and a majority plan to make a capital expenditure in the next six months."

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.8 in March — up 1.5 percent from February's level. Although restaurant operators reported net positive same-store sales results in March, softness in the customer traffic and labor indicators outweighed the performance, which resulted in an overall Current Situation Index reading below 100 for the seventh consecutive month.

After reporting a same-store sales decline for the first time in 21 months, operators bounced back in March with a modest net gain. Forty-four percent reported a same-store sales gain between March 2012 and March 2013, while 37 percent reported lower sales. In February, only 33 percent of operators reported higher same-store sales, while 48 percent reported a sales decline.

While overall sales were positive in March, operators reported a net decline in customer traffic for the fourth consecutive month. Thirty-four percent reported higher customer traffic levels between March 2012 and March 2013, while 42 percent of operators said their traffic declined. In February, 24 percent reported an increase in customer traffic, while 53 percent reported lower traffic levels.

Despite the mixed sales and traffic results, restaurant operators reported an increase in capital spending activity. Fifty-one percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 48 percent who reported similarly last month.

The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, stood at 101.4 in March — unchanged from February's level. Each of the four expectations indicators stood above 100 for the third consecutive month, which suggests optimism about business conditions in the coming months.

Restaurant operators remain generally optimistic that their sales will improve in the months ahead. Forty-four percent expect to have higher sales in six months (compared to the same period in the previous year), up slightly from 41 percent last month. Meanwhile, 15 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, essentially unchanged from 14 percent last month.

Restaurant operators are somewhat more bullish that the economy will improve in the coming months. Thirty-two percent said they expect economic conditions to improve in six months, up from 25 percent last month and the highest level in 10 months. However, 20 percent said they expect economic conditions to worsen in the next six months, unchanged from the previous two months.

A majority have plans for capital spending in the months ahead. Fifty-five percent of operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down slightly from 57 percent who reported similarly last month.

Read more about trends and statistics.

Topics: National Restaurant Association , Operations Management , Trends / Statistics

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