Improvements in same-store sales and traffic in May continued to boost the outlook for restaurant operators across the country, according to the latest Restaurant Performance Index by the National Restaurant Association, released Monday.

The monthly RPI, a composite index that tracks the health of and outlook for the U.S. restaurant industry, stood at 102.1 in May, a 0.4-percent increase over April and the third consecutive monthly gain.

It was also the strongest reading since March 2012. The RPI has stood above 100 for 15 consecutive months, signifying expansion in the index of key indicators.


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Restaurant Industry Update: May 2014

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“Positive sales results fueled the May increase in the RPI, as nearly two-thirds of restaurant operators said their same-store sales rose above year-ago levels,” said Hudson Riehle, the NRA’s senior vice president of the research and knowledge group. “In addition, restaurant operators are increasingly optimistic about continued sales gains in the months ahead, a sentiment that is also showing up in their capital expenditure plans.”

The index consists of two components: the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends among indicators that include same-store sales, traffic, labor and capital expenditures, stood at 102 in May, rising 0.7 percent from April and the third consecutive monthly gain. It was also the third month the situation index came in above 100, indicating expansion.

For the third consecutive month, a majority of restaurant operators reported higher same-store sales, with 65 percent reporting a gain since May 2013, a 51-percent from April.

Meanwhile, only 19 percent reported a same-store sales decline in May, falling from 26 percent who saw similar results in April.

Traffic also rose. In the survey, 47 percent of operators reported increased guest counts in May, while 29 percent reported a decline. In April, 44 percent of operators recorded a traffic increase, while 30 percent saw a decline.

Following those trends, 53 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the past three months, just below the 56 percent who said the same in April.

The Expectations Index, which measures operators’ six-month outlook on same-store sales, labor, capital expenditures and business conditions, remained at 102.2 in May, unchanged from April.

May was the 19th consecutive month in which the Expectations Index was above 100, indicating that operators remain optimistic about the months ahead.

Of those surveyed, 50 percent expect to have higher sales in the next six months, a 46-percent increase from last month and the strongest level in nearly two years. Only 8 percent expect their sales to be lower, a decrease of 11 percent who said the same in April.

Still, operators said their view of the economy remains somewhat clouded.

In the next six months, 28 percent of operators said they expect economic conditions to improve, while 15 percent expect conditions to worsen. The remaining 57 percent expect conditions to stay the same.

Still, 62 percent said they plan to make capital expenditures for equipment, expansion or remodeling in the next six months, an increase from 60 percent who said the same in April.

The RPI is based on responses to the NRA’s Restaurant Industry Tracking Survey. A video summary of the report is available, and more detailed analysis can be found at Restaurant TrendMapper.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout