National Restaurant Association's Restaurant Performance Index Jumped 1.5 Percent in May 6/30/2003
From: Katharine Kim, 202-331-5939; Tom Foulkes, 202-331-5902; both of the National Restaurant Association; media@dineout.org WASHINGTON, June 30 -- The outlook for the restaurant industry continues to improve, according to the National Restaurant Association's Restaurant Performance Index. The Restaurant Performance Index -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- gained 1.5 percent in May, marking the Index's third consecutive monthly gain. The strong May performance came on the heels of a 0.7 percent increase in April, propelling the Index to its highest level since June 2002. (To view the Index report, go to: http://www.restaurant.org/pdfs/research/index/may2003.pdf) 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. Growth in the Restaurant Performance Index in May was driven by gains 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), increased 2.5 percent in May. The strong May gain marked the third consecutive monthly increase in the Current Situation Index, following solid gains in both March and April. Growth in the Current Situation Index was fueled by an improving same-store sales situation. Although same-store sales remained negative overall, the May performance marked another step in the positive direction. Thirty-five percent of restaurant operators reported a same-store sales increase between May 2002 and May 2003 -- up from 28 percent who reported an increase in April. This marked the largest proportion of restaurant operators reporting positive same-store sales since October 2002. In addition, 44 percent of operators reported negative same-store sales in May -- down from 54 percent who reported negative sales in April. Current Situation Index growth also was propelled by an increase in capital expenditure activity among restaurant operators. Fifty-one percent of restaurant operators made a capital expenditure for equipment, expansion or remodeling during the past three months -- the highest level since September 2002. "The recent broad-based growth across both components of the Restaurant Performance Index sets the stage for improving restaurant industry growth during the second half of the year," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "Of considerable note is the increase in capital spending and taken in combination with the upcoming positive effects of tax cuts that were part of President Bush's Jobs and Economic Growth package, the industry outlook is the most positive to date this year." The May increase in the Restaurant Performance Index was also bolstered by growth in its expectations component. The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, increased 0.4 percent in May. For the first time in the 12-month history of the Restaurant Performance Index, at least half of restaurant operators are optimistic about short-term sales growth in their establishments. Fifty percent of restaurant operators expect to have higher sales in six months (compared to the same period last year) -- up from 45 percent who reported similarly last month, and just 35 percent who reported similarly in March. Meanwhile, only 17 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period last year -- the lowest level in the history of the Index. The growing optimism in terms of sales expectations is also translating into a surge in plans for capital spending among restaurant operators. Fifty-seven percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months -- up from 55 percent last month and just 53 percent in April. More detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based web site that provides real-time analysis of restaurant industry trends. For more information or to subscribe to TrendMapper, visit http://www.restaurant.org/trendmapper. A chart of the May Index is available at 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 870,000 restaurant and foodservice outlets and a work force of 11.7 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 http://www.restaurant.org. |