Sales and traffic bounced back somewhat for restaurant chains in March as the nation thawed after months of snow and ice, according to the latest Restaurant Performance Index, or RPI, by the National Restaurant Association.
The RPI rose to 101.4 in March, the highest level in 10 months, an increase of 0.9 percent compared with 100.5 in February. The monthly composite index tracks the health of and outlook for the U.S. restaurant industry and has remained above 100 for 13 consecutive months, which signifies a period of expansion.
“The solid March increase in the RPI was fueled by stronger sales and traffic levels, which bounced back from the weather-challenged results in recent months,” said Hudson Riehle, the NRA’s senior vice president of the research and knowledge group. “Looking forward, restaurant operators are increasingly optimistic about sales gains, and a majority plan to make capital expenditures in the next six months.”
Restaurant Industry Update
The RPI consists of two components: the Current Situation Index and the Expectations Index.
The Current Situation Index, which measures same-store sales, traffic, labor and capital expenditures, stood at 100.8 in March, rising 1.5 percent from February’s level of 99.3.
For the first time in four months, a majority of the operators surveyed reported higher same-store sales in March compared with a year ago. In the survey, 55 percent of operators saw same-store sales gains compared with 44 percent in February. By comparison, 32 percent of operators reported same-store sales declines, a decrease from 37 percent in February.
March also brought improvements in traffic trends, with 46 percent of operators reporting higher customer foot traffic levels, rising from 35 percent who saw such increases in February. Meanwhile, 33 percent of operators said traffic declined in March, falling from 43 percent in February.
Following those trends, 49 percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, rising from 44 percent who said the same in February.
The Expectations Index measures the six-month outlook of restaurant operators on four indicators: same-store sales, employees, capital expenditures and business conditions.
The overall Expectations Index stood at 102.0 in March, rising 0.3 percent from February and the strongest level in nine months. It was the 17th consecutive month the Expectations Index stood above 100, indicating that restaurant operators remain optimistic about the months ahead.
Forty-nine percent of operators in March said they expect to have higher sales in six months, rising from 40 percent in February and the highest level in nearly two years. Only 6 percent of them said they expect their sales volume to be lower over the next six months than it was during the same period last year, falling from 11 percent in February.
Operator outlook for the economy, however, remains somewhat tempered, the survey found. Twenty eight percent of those surveyed said they expect economic conditions to improve in six months, while 14 percent expect conditions to get worse. The remaining 58 percent of operators expect things to remain generally unchanged.
Still, 58 percent of operators also said they plan to spend on equipment, expansion or remodeling in the next six months — about the same number as in February.
The full RPI report can be found online at the NRA’s website.
Contact Lisa Jennings at email@example.com.
Follow her on Twitter: @livetodineout