The NRA's RPI stood at 101 for March, the third time in four months it reached a level in excess of 100 signaling growth among the key industry indexes.
Restaurant operators' plans for capital spending rose to its highest level in 41 months, according to the National Restaurant Association's March Restaurant Performance Index. The study showed that 53 percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up slightly from 52 percent who reported similarly last month.
In addition, the March RPI came in at 101.0, up 0.3 percent from February and the third gain in the last four months. March also represents the sixth time in the last seven months that the RPI stood at more than 100, which signifies expansion in the index of key industry indicators.
"The March increase in the Restaurant Performance Index was fueled by continued improvements in the same-store sales and customer traffic indicators," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "Most notably, the overall Current Situation component of the RPI stood above 100 for the first time in 43 months, which signifies expansion in the indicators of current industry performance."
The RPI is a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry and consists of two components: the Current Situation Index and the Expectations Index.
The Current Situation Index, which measures current trends across such industry indicators as same-store sales, traffic, labor and capital expenditures, stood at 100.2 in March – up 0.8 percent from February and its third strong gain in the last four months. March also marked the first time in 43 months that the Current Situation Index stood at more than 100, according to the study. This was driven by the fact that 52 percent of restaurant operators reported a same store sales gain between March 2010 and March 2011. This is the strongest level for this index since August 2007, according to the NRA. In addition, 45 percent of restaurant operators reported increased customer traffic levels in March 2011 compared to the same month in 2010.
Capital spending activity among restaurant operators held relatively constant in recent months, according to the NRA. Forty percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, essentially unchanged from the levels reported in the previous four 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 101.7 in March – down slightly from February's level of 101.9, according to the NRA. Despite the decline, the Expectations Index stood at more than 100 for the eighth consecutive month, which signifies expansion in the forward-looking indicators.
Restaurant operators remain optimistic that their sales levels will grow, with 50 percent expecting higher sales in six months compared to the same period in the previous year, according to the March RPI. This represents a slight increase from February when 48 percent of operators projected higher sales in the coming months, according to the NRA. Just 13 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, compared with 12 percent who reported similarly last month.
And for the sixth consecutive month, restaurant operators reported a positive outlook for staffing gains in the months ahead. Twenty-six percent of restaurant operators plan to increase staffing levels in six months (compared with the same period in the previous year), while just 11 percent said they expect to reduce staffing levels in six months.