US restaurant industry outlook strengthens in June

by Meat&Poultry Staff
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WASHINGTON – The National Restaurant Association’s Restaurant Performance Index (RPI) rose above 100 in June, driven by stronger same-store sales and traffic levels and a more optimistic outlook among restaurant operators. A monthly composite index that tracks the health of and outlook for the US restaurant industry, the RPI was 100.6 in June, up 0.8 percent from May’s level of 99.9. June represented the sixth time in the last seven months that the RPI stood above 100, which signifies expansion in the index of key industry indicators, NRA relays.

“The RPI’s solid improvement in June was due in large part to stronger same-store sales and customer traffic performances, which bounced back from their May declines,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are optimistic that their sales environment will improve in the months ahead, while their outlook for capital spending also remains strong.”

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 100.5 in June – up a solid 1.4 percent from May’s level of 99.2. The Current Situation Index stood above 100 in three of the last four months, which signifies expansion in the current situation indicators.

In June, restaurant operators reported stronger same-store sales results. Fifty-one percent of restaurant operators reported a same-store sales gain between June 2010 and June 2011, up from 39 percent of operators who reported higher same-store sales in May. However, 31 percent of operators reported a same-store sales decline in June, down from 40 percent of operators who reported lower sales in May.

Improving customer traffic levels were also reported in June by restaurant operators. Between June 2010 and June 2011, 44 percent reported an increase in customer traffic up from 33 percent of operators who reported higher traffic in May. In comparison, 33 percent of operators reported a traffic decline in June, down from 41 percent who reported lower traffic in May.

Restaurant operators also reported an increase in capital spending activity. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 44 percent who reported similarly last month.

Restaurant operators remain generally optimistic about sales growth in the months ahead. Forty percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), essentially unchanged from 41 percent who reported similarly last month.

However, restaurant operators are somewhat less optimistic about the direction of the overall economy in the months ahead. Twenty-six percent of restaurant operators said they expect economic conditions to improve in six months, up slightly from 24 percent who reported similarly last month.
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