The outlook for the restaurant industry grew more optimistic in April, as the National Restaurant Association's (NRA) comprehensive index of restaurant activity registered its fourth consecutive monthly gain. The NRA Restaurant Performance Index (RPI)--a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry--stood at 98.6 in April, up 0.8 percent from March, its highest level in 11 months."The recent growth in the RPI was driven by the Expectations component, which rose above 100 in April for the first time in 18 months, a level which indicates expansion," Hudson Riehle, senior vice president of research and information services for the NRA, said in a press release. "Although the RPI's Current Situation indicators are still in a period of contraction, the solid improvement in the forward-looking indicators suggests that the end of the industry’s downturn may be in sight."
The RPI 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 RPI 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 97.0 in April--up 0.9 percent from March and its highest level since August 2008. However, April represented the 20th consecutive month below 100, which continues to signify contraction in the current situation indicators.
- 26 percent of restaurant operators reported a same-store sales gain between April 2008 and April 2009, up slightly from 24 percent who reported a sales gain in March.
- 59 percent reported a same-store sales decline in April, down from 63 percent who reported negative sales in March.
- 23 percent reported an increase in customer traffic between April 2008 and April 2009, up from 20 percent who reported similarly in March.
- 60 percent reported a traffic decline in April, down from 63 percent who reported similarly in March.
- 43 percent said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in 10 months.
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 100.2 in April – up 0.8 percent from March and its fifth consecutive monthly increase. In addition, the Expectations Index crossed above the 100 level for the first time in 18 months, which signifies expansion in the forward-looking indicators.
- For the first time in 15 months, restaurant operators reported a positive six-month outlook for sales growth. Thirty-three percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 30 percent last month and the highest level in 18 months.
- 30 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, down from 38 percent who reported similarly last month.
- 37 percent said they expect economic conditions to improve in six months, up from 30 percent who reported similarly last month and the highest level in three years.
- 16 percent expect economic conditions to worsen in six months, down from 21 percent last month.
- 46 percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 44 percent last month and just 37 percent four months ago.
While the RPI is released on the last business day of each month, more detailed data and analysis can be found on Restaurant TrendMapper, the NRA's subscription-based service that provides detailed analysis of restaurant industry trends. Follow Restaurant TrendMapper on Twitter @trendmapper.
