Outlook for Restaurant Industry Positive as Restaurant Performance Index Remained Steady in December 1/30/2004
From: Katharine Kim of the National Restaurant Association, 202-331-5939 or media@dineout.org WASHINGTON, Jan. 30 -- As the calendar turned to 2004, the outlook for restaurant industry growth remained strong, according to the National Restaurant Association's comprehensive index of restaurant activity. The Association's Restaurant Performance Index -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- remained steady in December from its strong November level. The solid index performance in December was buoyed by positive same-store sales and an increasingly optimistic outlook in terms of sales growth and the direction of the economy. The Restaurant Performance Index is based on the responses to the National Restaurant Association's Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. The Index consists of two components -- the Current Situation Index and the Expectations Index. (Click on the following link to view this month's Index report: http://www.restaurant.org/pdfs/research/index/dec2003.pdf). "Looking at the Restaurant Performance Index on a quarterly basis, the trends are even more impressive. The index rose a solid 1.6 percent between the third and fourth quarters of 2003, bolstered by strong gains in both the current situation and expectations components," said Hudson Riehle, senior vice president of research and information services for the Association. "In addition, the Expectations Index registered gains during each of the four quarters of 2003, which bodes well for continued industry growth in 2004." December's Restaurant Performance Index remained strong as a result of relatively steady performances in both components of the index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), edged down a modest 0.1 percent in December. For the fifth consecutive month, restaurant operators reported positive same-store sales. Forty-nine percent of restaurant operators reported a same-store sales increase between December 2002 and December 2003 -- up from 46 percent who reported a same- store sales gain in November. Meanwhile, only 35 percent of operators reported a same-store sales decline between December 2002 and December 2003. Customer traffic results showed a slight decline in December. Thirty-eight percent of restaurant operators reported an increase in customer traffic between December 2002 and December 2003 -- matching the proportion who registered an increase in November. However, 41 percent of operators reported a decline in customer traffic in December -- up from 38 percent who reported similarly in November. The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, increased 0.1 percent in December. The December gain followed a stronger 0.5 percent gain in November, and marked the sixth consecutive monthly increase in the Expectations Index. Restaurant operators continue to be optimistic about short-term sales growth in their establishments. More than three out of five restaurant operators (62 percent) expect to have higher sales in six months (compared to the same period in the previous year) -- marking the third consecutive month with a level of 60 percent or greater. Meanwhile, only 11 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year. Restaurant operators also remain confident in the direction of the overall economy. Sixty-three percent of restaurant operators expect economic conditions in six months to be better than they are now -- matching the strong level posted last month. Only 4 percent of restaurant operators expect economic conditions to worsen in six months. This optimism is also contributing to a boost in plans for capital expenditures within the restaurant industry. Sixty-four percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months -- the strongest level on record. While the Restaurant Performance Index is consistently released on the last business day of each month, more detailed data and analysis can be found on Restaurant TrendMapper ( http://www.restaurant.org/trendmapper ), the Association's subscription-based Web site that provides real-time analysis of restaurant industry trends. A chart of the December Restaurant performance Index is available by visiting http://www.restaurant.org/pressroom. ------ The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 878,000 restaurant and foodservice outlets and a work force of 12 million employees - making it the cornerstone of the economy, career opportunities and community involvement. Along with the National Restaurant Association Educational Foundation, the Association works to represent, educate and promote the rapidly growing industry. For more information, visit the Association's Web site at http://www.restaurant.org. |