Restaurant Performance Index Remains Strong as Hiring Picks up in March; Same-store Sales Remain Solid; Outlook for Hiring Positive 4/30/2004
From: Katharine Kim, 202-331-5939, or Brad Dayspring, 202-331-5902, both of the National Restaurant Association, media@dineout.org WASHINGTON, April 30 -- With restaurant- industry hiring picking up and operators optimistic about continued growth, the National Restaurant Association's comprehensive index of restaurant activity remained strong in March. The Association's Restaurant Performance Index -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- dropped a modest 0.2 percent from its record February level. 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/200403.pdf). "A modest decline from February's record level was to be expected, as sales comparisons in March eased off February's strong leap-year bolstered levels," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "However, the overall first quarter performance underscored the health of the industry and the optimistic outlook for continued growth. The Index rose a solid 1.8 percent above its fourth quarter level, marking the fourth consecutive quarterly gain in the Index." The March downtick in the Restaurant Performance Index was the result of modest declines in both the current situation and expectations components of the Index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), declined 0.3 percent in March -- after posting a strong 2.7 percent gain in February. For the third consecutive month, a majority of operators reported an increase in same-store sales. Fifty-nine percent of restaurant operators reported a same-store sales gain between March 2003 and March 2004, while only 23 percent of operators reported a decline. In addition, March marked the eighth consecutive month of positive same-store sales. Customer traffic also remained strong in March. Forty-nine percent of operators reported an increase in customer traffic between March 2003 and March 2004, compared to 27 percent who registered a decline. While sales and traffic performances were not as strong as their robust February levels, industry labor indicators registered solid improvements in March. For the first time in the 22-month history of the Restaurant Performance Index, operators reported a net-positive result in terms of staffing levels. Twenty-six percent of restaurant operators added employees between March 2003 and March 2004, while only 17 percent of operators downsized. Restaurant operators are also expanding the average work week for their current employees, which is another positive sign for the industry. Twenty-nine percent of operators reported an increase in the average hours worked by their employees in March, while only 20 percent reported a decline in the average work week, as compared to their March 2003 levels. The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, edged down 0.1 percent in March. Although the Expectations Index registered its first decline in nine months, its strong level still points toward solid industry growth during the next several months. A solid majority of restaurant operators are optimistic about sales growth in their establishments. Seventy-one percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year) -- down slightly from 72 percent last month. In contrast, only 7 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. Bolstered by their positive outlook for sales growth, restaurant operators continue to expand their plans for staffing increases during the next several months. Thirty-eight percent of operators expect to have higher staffing levels in six months (compared to the same period in the previous year), while only nine percent of operators expect to employ fewer workers in six months. For the second consecutive month, the cost of insurance topped the list of challenges among restaurant operators. Twenty-three percent of restaurant operators identified insurance costs as the number one challenge facing their business -- matching the strong level registered last month. Building/maintaining sales volume finished a distant second -- identified as the top challenge by 16 percent of operators. Rising food costs - in particular beef and cheese -- was identified as the number one challenge facing the business of 11 percent of restaurant operators. 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 March 2004 Restaurant Performance Index is available on the Association's Web site, http://www.restaurant.org. ------ 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. |