Restaurant Performance Index posts modest gain

March 29, 2007
WASHINGTON, D.C. — The outlook for the restaurant industry improved slightly in February as the National Restaurant Association's comprehensive index of restaurant activity registered a modest gain.  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 100.8 in February, up 0.2 percent from its January level. 
In addition, the RPI remained above 100 for the 46th consecutive month, which represents expansion in the Association's composite index of eight key industry indicators. 
"Restaurant operators remain optimistic about their sales prospects as well as the direction of the overall economy, which sets the stage for continued industry growth in the second half of 2007," said Hudson Riehle, senior vice president of Research and Information Services for the NRA.  "Although the RPI's current situation indicators remained soft against the backdrop of a strong performance in the first quarter of 2006, the Expectations Index continued to improve."
The Restaurant Performance Index is based on the responses to the NRA's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures.  The Index consists of two components - the Current Situation Index and the Expectations Index. 
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 99.0 in February - up 0.2 percent from January.  Despite the modest gain, the index remained below 100 for the second consecutive month, which signifies contraction in the current situation indicators.
Restaurant operators reported a net negative same-store sales result in February, as comparisons remained difficult against a strong February 2006 performance.  Thirty-eight percent of restaurant operators reported a same-store sales gain between February 2006 and February 2007, matching the proportion who registered a sales gain in January.  Forty-seven percent of operators reported a same-store sales decline in February, up from 45 percent who reported similarly in January.   
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 102.4 in February - up 0.2 percent from January and its strongest level in 10 months. 
A majority of restaurant operators are optimistic about sales growth in their establishments.  Fifty-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year) while only 14 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year.
Restaurant operators are also more optimistic about the direction of the overall economy.  Thirty-six percent of operators expect economic conditions to improve in six months - the strongest level in 10 months.  Fifteen percent of operators said they expect economic conditions to worsen in six months, while 49 percent expect economic conditions to remain about the same. 
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Topics: Associations , Food & Beverage , Operations Management , Trends / Statistics

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