Restaurant Industry Remains on Expansion Path

Forty eight percent of foodservice operators report making a capital expenditure in the past six months.

The National Restaurant Association's (NRA) Restaurant Performance Index (RPI) stood at 100.9 in April, marking the fifth consecutive month it exceeded 100, signaling expansion in the index of key industry indicators. Positive same-store sales and solid optimism among restaurant operators for continued growth are the key factors driving these results, according to the NRA.

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

The Current Situation Index, which measures current trends in same-store sales, traffic, labor and capital expenditures, stood at 100.3 in April — up slightly from the March level of 100.2. Fifty percent of restaurant operators reported a same-store sales gain between April 2010 and April 2011, down slightly from 52 percent of operators who reported higher same-store sales in March, according to the NRA. In comparison, 31 percent of operators reported a same-store sales decline in April, matching the proportion of operators who reported lower sales in March.

Thirty-eight percent of restaurant operators reported an increase in customer traffic between April 2010 and April 2011, down from 45 percent of operators who reported higher traffic in March. In contrast, 35 percent of operators reported a traffic decline in April, up from 32 percent in March. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in nearly three years.

The Expectations Index, which measures restaurant operators' six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 101.5 in April — down slightly from a level of 101.7 in March. Forty-seven percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down slightly from 50 percent who reported similarly last month, according to the NRA. In comparison, 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. Forty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months.

Twenty-four percent of restaurant operators plan to increase staffing levels in six months (compared to the same period in the previous year), while just 11 percent said they expect to reduce staffing levels in six months.

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