Canadian Pizza Magazine

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Restaurant industry outlook remains positive


June 4, 2012
By Canadian Pizza

June 4, 2012, Washington – The outlook for the restaurant industry remained positive for the coming months, as the National Restaurant Association's Restaurant Performance Index (RPI) stood well above 100 in April. 


Read more here: http://www.sacbee.com/2012/05/31/4528487/restaurant-industry-outlook-remains.html#storylink=cpy

The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry
– stood at 101.6 in April, down 0.6 per cent from the strong level of
102.2 registered in March. Despite the decline, April represented the
sixth consecutive month that the RPI stood above 100, which signifies expansion in the index of key industry indicators.

"Although
the Restaurant Performance Index dipped somewhat in April, it remained
solidly in positive territory," said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the Association. "Restaurant operators reported positive same-store sales for the 11th
consecutive month, and a majority of them expect business to continue to
improve in the months ahead."

The RPI is constructed so that the health of the restaurant industry
is measured in relation to a steady-state level of 100. Index values
above 100 indicate that key industry indicators are in a period of
expansion, while index values below 100 represent a period of
contraction for key industry indicators. The index consists of two
components – the current situation index and the expectations index.

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The current situation index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures),
stood at 101.0 in April – down one per cent from a level of 102.0 in
March. Despite the decline, the current situation index remained above
100 for the sixth consecutive month, which signifies expansion in the
current situation indicators.

Restaurant operators reported
positive same-store sales for the 11th consecutive month in April,
though sales results were somewhat softer than March. Fifty-seven
per cent of restaurant operators reported a same-store sales gain between
April 2011 and April 2012, down from 65 per cent who reported a sales
gain in March. Meanwhile, 25 per cent of operators reported lower
same-store sales in April, up from 21 per cent who reported similarly in
March.

Restaurant operators also reported somewhat softer
customer traffic results in April. Forty-six percent of restaurant
operators reported higher customer traffic levels between April 2011 and
April 2012, down from 55 per cent who reported positive traffic in
March. In comparison, 30 per cent of operators reported lower customer
traffic levels in April, up from 24 per cent in March.

Along with softer sales and traffic levels, restaurant operators reported somewhat lower capital spending levels. Forty-four per cent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 48 per cent who reported similarly last month.

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 102.2 in April –
down slightly from a 15-month high of 102.4 registered in March.  April
also represented the eighth consecutive month that the Expectations
Index stood above 100, which signifies a positive outlook among
restaurant operators for business conditions in the coming
months.      

For the fifth consecutive month, a majority of
restaurant operators expect their sales to be higher in the months
ahead. Fifty-two per cent of restaurant operators expect to have higher
sales in six months (compared to the same period in the previous year),
essentially unchanged from the previous four months. In comparison,
only eight per cent 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 slightly from nine per cent last month.

Restaurant
operators also remain generally optimistic about the direction of the
overall economy. Thirty-four per cent of restaurant operators said they
expect economic conditions to improve in six months, down slightly from
38 per cent last month. Meanwhile, only 10 per cent of operators said
they expect economic conditions to worsen in the next six months,
compared to 12 per cent who reported similarly last month.

For the
seventh consecutive month, restaurant operators reported positive
expectations for staffing growth in the months ahead. Twenty-six
per cent of restaurant operators plan to increase staffing levels
in six months (compared to the same period in the previous year), while
only eight per cent said they expect to reduce staffing levels in six
months.

Along with a positive outlook for sales and the economy,
restaurant operators also continue to plan for capital spending in the
months ahead.  Fifty-two per cent of restaurant operators plan to make a capital expenditure
for equipment, expansion or remodeling in the next six months, down
slightly from 56 per cent who reported similarly last month.

The RPI is based on the responses to the National Restaurant Association'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 full report and a
video summary are available online at http://www.restaurant.org/research/economy/rpi.