Restaurant Performance Index posts moderate gain in April

Driven by stronger same-stores sales and customer traffic levels, the National Restaurant Association's Restaurant Performance Index (RPI) posted a moderate gain in April. The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 102.7 in April, up 0.5 percent from a level of 102.2 in March. In addition, April represented the 26^th consecutive month in which the RPI stood above 100, which signifies expansion in the index of key industry indicators.

For the full outlook on the restaurant industry, view the Restaurant Performance Index here: http://www.restaurant.org/RPI.

"While individual indicators experienced some choppiness in recent months, the overall RPI stood above the 102 level for seven consecutive months," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "This was driven by consistent majorities of restaurant operators reporting positive same-store sales as well as an optimistic outlook for sales growth 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.

Current Situation Index
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 102.9 in April – up 1.0 percent from March and the highest level in four months. In addition, the Current Situation Index stood above 100 for the 14^th consecutive month, which signifies expansion in the current situation indicators.

For the 14^th consecutive month, a majority of restaurant operators reported higher same-store sales, with April's results representing a solid improvement over March. Seventy-one percent of restaurant operators reported a same-store sales gain between April 2014 and April 2015, up from 62 percent who reported higher sales in March. In comparison, only 13 percent of operators reported a same-store sales decline in April, down from 24 percent in March.

Restaurant operators also reported stronger customer traffic results in April. Fifty-five percent of restaurant operators reported an increase in customer traffic between April 2014 and April 2015, up from 45 percent who reported higher traffic in March. Twenty-five percent of operators said their traffic declined in April, down from 34 percent in March.

With restaurant operators reporting positive same-store sales and customer traffic levels in recent months, capital spending also remained at elevated levels. Fifty-six percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which marked the seventh consecutive month in which a majority of operators reported making an expenditure.

Expectations Index
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 102.5 in April – essentially unchanged from a level of 102.6 in March. April represented the 30^th consecutive month in which the Expectations Index stood above 100, which indicates a positive outlook for business conditions in the coming months.

A majority of restaurant operators are optimistic that their sales will rise in the months ahead. Fifty-two percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 59 percent from last month. Meanwhile, only six 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, up slightly from three percent last month.

Restaurant operators are somewhat less bullish about the direction of the overall economy. Twenty-eight percent of restaurant operators said they expect economic conditions to improve in six months, down from 35 percent last month. Thirteen percent expect economic conditions to worsen in six months, while the remaining 59 percent expect economic conditions in six months to be about the same as they are now.

For the 20^th consecutive month, a majority of restaurant operators said they are planning for capital expenditures in the months ahead. Fifty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 53 percent 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 video summary are available online at Restaurant.org/RPI.

Source: national Restaurant Association

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