Restaurant industry health and outlook hits a two-year peak
Driven by stronger sales and traffic levels and an increasingly optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index rose to its highest level in more than two years. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.1 in May, up 0.4 percent over April and the third consecutive monthly gain and strongest reading since March 2012.
"Positive sales results fueled the May increase in the RPI, as nearly two-thirds of restaurant operators said their same-store sales rose above year-ago levels," NRA SVP Hudson Riehle said in a news release. "In addition, restaurant operators are increasingly optimistic about continued sales gains in the months ahead, a sentiment that is also showing up in their capital expenditure plans."
Current Situation Index
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 102.0 in May – up 0.7 percent from April and the third consecutive solid monthly gain.
For the third consecutive month, a majority of restaurant operators reported higher same-store sales: 65 percent reported a gain between May 2013 and May 2014, up from 51 percent in April and the highest proportion since March 2012. Meanwhile, only 19 percent reported a same-store sales decline in May, down from 26 percent who reported similarly in April.
Operators also reported stronger customer traffic levels in May. Forty-seven percent reported an increase in customer traffic levels between May 2013 and May 2014, while 29 percent reported a decline. In April, 44 percent said their traffic rose from the previous year, while 30 percent reported a decline.
Respondents also continued to report positive capital spending trends: 53 percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, just below the 56 percent who reported similarly last month.
The Expectations Index, which measures restaurant operators’ six-month outlook for the four industry indicators, stood at 102.2 in May – unchanged from April’s level.
Restaurant operators are increasingly optimistic about their sales prospects in the coming months, with 50 percent expecting to have higher sales in six months (compared to the same period in the previous year), up from 46 percent last month and the strongest level in nearly two years. Meanwhile, only 8 percent expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 11 percent last month.
Still, respondents’ view of the economy remains somewhat clouded. Twenty-eight percent of operators said they expect economic conditions to improve in six months, while 15 percent expect the economy to worsen. The remaining 57 percent expect economic conditions in six months to be about the same as they are now.
For the ninth consecutive month, a majority of operators are planning for capital expenditures in the coming months. Sixty-two percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 60 percent who reported similarly last month.