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The outlook for the restaurant industry remains positive for the months ahead, as the National Restaurant Association's Restaurant Performance Index (RPI) remained above 100 in May.
The RPI--a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry--stood at 101.4 in May, down 0.2 percent from April's level of 101.6. Despite the decline, May represented the seventh consecutive month that the RPI stood above 100.
"Despite a soft patch in the overall economy, restaurant operators reported positive same-store sales for the 12th consecutive month," says Hudson Riehle, senior vice president of the Research and Knowledge Group for the NRA. "Looking forward, restaurant operators remain generally optimistic about sales growth in the months ahead, though they are somehwat less bullish about the direction of the economy."
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 about 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.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor, and capital expenditures), stood at 100.8 in May, down 0.2 percent from April's level of 101.
Sixty-one percent of restaurant operators reported a same-store sales gain between May 2011 and May 2012, up from 57 percent who reported a sales gain in April.
Restaurant operators reported a slight uptick in capital spending. Forty-six percent of operators said they made a capital expenditure for equipment, expansion, or remodeling during the last three months, up slightly from 44 percent 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 in May, down slightly from April's level of 102.2. May represented the ninth consecutive month that the Expectations Index stood above 100.
Forty-eight percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), which is down slightly from 52 percent who reported similarly last month.
Restaurant operators are somewhat less bullish about the direction of the overall economy, with 36 percent of restaurant operators saying they expect economic conditions to improve in six months, up slightly from 34 percent last month.
For the eighth consecutive month, restaurant operators reported positive expectations for staffing growth in the months ahead, with 20 percent of operators planning to increase staffing levels in six months.
Along with a positive sales outlook, operators continue to plan for capital spending in the coming months. Fifty-five percent of operators plan to make a capital expenditure for equipment, expansion, or remodeling in the next six months, up from 52 percent who reported similarly last month.