Restaurant industry metrics reach 10-month high
Driven by stronger same-store sales and customer traffic and a more optimistic outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index rose to a 10-month high in March.
The RPI — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — stood at 101.4 in March, up 0.9 percent from February's level of 100.5. In addition, the RPI remained above 100 for the 13th consecutive month, which signifies expansion in the index of key industry indicators.
"The solid March increase in the RPI was fueled by stronger sales and traffic levels, which bounced back from the weather-challenged results in recent months," NRA SVP of Research and Knowledge Group Hudson Riehle said in a news release. "Looking forward, restaurant operators are increasingly optimistic about sales gains, and a majority plan to make capital expenditure in the next six months."
Current Situation index
The Current Situation Index, which measures same-store sales, traffic, labor and capital expenditures, stood at 100.8 in March — up 1.5 percent from February's level of 99.3.
For the first time in four months, a majority of restaurant operators reported higher same-store sales. Fifty-five percent reported a same-store sales gain between March 2013 and March 2014, up from 44 percent who reported higher sales in February. In comparison, 32 percent reported a decline in same-store sales in March, down from 37 percent in February.
Operators also reported stronger customer traffic levels in March. Forty-six percent reported higher customer traffic levels between March 2013 and March 2014, up from 35 percent who reported a traffic gain in February. Meanwhile, 33 percent of operators reported a decline in customer traffic in March, down from 43 percent in February.
Along with stronger sales and customer traffic results, respondents reported an uptick in capital spending activity. Forty-nine percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 44 percent who reported similarly last month.
The Expectations Index, which measures restaurant operators' six-month outlook, stood at 102.0 in March — up 0.3 percent from February and the strongest level in nine months.
Operators are increasingly optimistic about sales gains in the coming months, with 49 percent expecting to have higher sales in six months, up from 40 percent last month and the highest level in nearly two years.
Conversely, only 6 percent of operators 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.
Meanwhile, operators' outlook for the economy remains somewhat tempered. Twenty-eight percent said they expect economic conditions to improve in six months, while 14 percent expect the economy to worsen. The remaining 58 percent expect economic conditions to remain generally unchanged in the next six months.
For the seventh consecutive month, a majority of restaurant operators are planning for capital expenditures in the near future: 58 percent plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, matching the proportion who reported similarly last month.