Canadian Pizza Magazine

US restaurant outlook up as RPI rises

By Canadian Pizza   

News



May 6, 2009, Washington, DC –
The outlook for the restaurant industry improved in March, as the National
Restaurant Association’s comprehensive index of restaurant activity rose for
the third consecutive month.



The Association’s Restaurant Performance Index (RPI)
– a monthly composite index that tracks the health of and outlook for the US
restaurant industry – stood at 97.7 in March, up 0.2 percent from February and
1.3 per cent during the last three months.

“Although the RPI remained below 100 for the 17th consecutive month, which
signals contraction, there are clear signs of improvement,” said Hudson Riehle,
senior vice president of Research and Information Services for the Association,
in a news release. “Restaurant operators reported a positive six month economic
outlook for the first time in 18 months, and capital spending plans rose to a
nine month high.”

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 RPI consists of two components – the Current
Situation Index and the Expectations Index.

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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 Current Situation Index, which measures current trends in four industry
indicators (same-store sales, traffic, labor and capital expenditures), stood
at 96.1 in March – down 0.4 per cent from February and the first decline in
three months. In addition, March represented the 19th consecutive month below
100, which signifies contraction in the current situation indicators.

Capital spending activity in the restaurant industry held relatively steady in
recent months. Thirty-five per cent of operators said they made a capital
expenditure for equipment, expansion or remodeling during the last three
months, roughly on par with the levels reported by operators in the previous
three months.

The growth in the Expectations Index was buoyed by restaurant operators’
outlook for the economy. In fact, for the first time in 18 months, a higher
proportion of restaurant operators said they expect the economy to improve in
six months, as compared to the per cent who expect economic conditions to
worsen. Thirty per cent of restaurant operators said they expect economic
conditions to improve in six months, up from 22 per cent who reported similarly
last month and the highest level in 21 months. In comparison, only 21 percent
of operators expect economic conditions to worsen in six months, down sharply
from 36 percent last month.

Although their economic outlook improved, restaurant operators remain somewhat
uncertain about sales growth in coming months. Thirty per cent of restaurant
operators expect to have higher sales in six months (compared to the same
period in the previous year), up from 25 per cent who reported similarly last
month. Thirty-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 41 per cent who reported similarly last month.

As the outlook for the economy improved, so too did operators’ plans for
capital expenditure activity in the months ahead. Forty-four percent of
restaurant operators plan to make a capital expenditure for equipment,
expansion or remodeling in the next six months, the highest level since July
2008.


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