Buoyed by stronger same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) hit a 14-month high in May. The RPI - a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry - stood at 101.8 in May, up 0.9 percent from April and the third consecutive monthly gain. May also represented the third straight month that the RPI surpassed the 100 level, which signifies expansion in the index of key industry indicators.
“The May increase in the Restaurant Performance Index was driven by broad-based gains in the current situation indicators, most notably positive same-store sales and customer traffic results,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association.
“In addition, restaurant operators remain optimistic about continued sales growth and a majority plan to make a capital expenditure in the next six months.”
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 Index consists of two components - the Current Situation Index and the Expectations Index.
The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.6 in May - up 1.6 percent from a level of 100.1 in April. May represented the strongest Current Situation Index reading since March 2012, and signifies expansion in the current situation indicators.
A majority of restaurant operators reported higher same-store sales in May, and the overall results were a solid improvement over the April performance. Sixty-three percent of restaurant operators reported a same-store sales gain between May 2012 and May 2013, up from 49 percent who reported higher sales in April.
Meanwhile, just 23 percent of operators reported a decline in same-store sales in May, down from 33 percent in April.
Restaurant operators also reported a net gain in customer traffic levels in May. Forty-seven percent of restaurant operators reported higher customer traffic levels between May 2012 and May 2013, while 30 percent of operators said their traffic declined. In April, 36 percent of operators reported an increase in customer traffic, while 40 percent reported lower traffic levels.
Along with the positive sales and traffic results, restaurant operators reported an increase in capital spending activity. Fifty-two percent of operators saying they made a capital expenditure for equipment, expansion or remodeling during the last three months, up from 47 percent who reported similarly last month.