Restaurant Industry Outlook Improves As Restaurant Performance Index Stood Above 100 For 4th Consecutive Month

Bolstered by positive same-store sales and traffic results and an optimistic outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) remained above 100 for the fourth consecutive month in February. The RPI - a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry - stood at 101.9 in February, up 0.6 percent from January's level of 101.3. In addition, the RPI stood solidly above the 100 threshold in February, which signifies expansion in the index of key industry indicators.

"Buoyed by continued gains in national employment and an extra day in February as a result of Leap Year, a solid majority of restaurant operators reported positive same-store sales and traffic results," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "In addition, restaurant operators are bullish about sales growth in the months ahead, while their outlook for the economy remains cautiously optimistic."

"Perhaps the most positive indicator is the optimistic outlook for staffing levels in the months ahead," Riehle added. "Only seven percent of restaurant operators expect to reduce staffing levels in the next six months, the lowest level in nearly eight years."

Watch a video of Riehle providing commentary on the February RPI, key economic indicators and gas prices.

The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction for key industry indicators.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.9 in February - up 1.3 percent from January's level of 100.6. In addition, the Current Situation Index stood above 100 for the fourth consecutive month, which signifies expansion in the current situation indicators.

Restaurant operators reported positive same-store sales for the ninth consecutive month in February, bolstered by an extra day in February as a result of Leap Year. Sixty-three percent of restaurant operators reported a same-store sales gain between February 2011 and February 2012, up from 56 percent who reported a sales gain in January. In comparison, just 18 percent of operators reported lower same-store sales in February, down from 26 percent who reported similarly in January.

Restaurant operators also reported solid customer traffic results in February. Fifty-five percent of restaurant operators reported higher customer traffic levels between February 2011 and February 2012, while just 19 percent reported a traffic decline. In January, 46 percent of operators reported higher customer traffic, while 30 percent reported a traffic decline.

Along with steadily positive sales and traffic results, restaurant operators reported an uptick in capital spending activity. Forty-seven percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 42 percent who reported similarly last month.

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 102.0 in February - essentially unchanged from January's level of 102.1. February marked the sixth consecutive month that the Expectations Index stood above 100, which represents an optimistic outlook among restaurant operators for business conditions in the months ahead.