National Restaurant Association's Restaurant Performance Index Gained 0.7 Percent in April

5/30/2003

From: Katharine Kim, 202-331-5939, or Tom Foulkes, 202-331-5902, both of the National Restaurant Association, media@dineout.org

WASHINGTON, May 30 -- Restaurant operators continue to grow more optimistic about the direction of the economy, 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 0.7 percent in April.

The April advance came on the heels of a strong 1.7 percent jump in March, which followed four consecutive monthly declines. As a result of the increases posted in March and April, the Restaurant Performance Index currently stands at its highest level since October 2002.

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 April was fueled by gains in both the current situation and expectations components of the Index. The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, increased 0.4 percent in April. Nearly half of restaurant operators are optimistic that economic conditions will improve in the near-term. Forty-eight percent of restaurant operators expect business conditions in six months to be better than they are now - up from 47 percent who reported similarly last month. Only 10 percent of restaurant operators expect business conditions to deteriorate in six months.

Restaurant operators are also more optimistic about short-term sales growth in their own establishments. Forty-five percent of restaurant operators expect to have higher sales in six months (compared to the same period last year) - up from 41 percent who reported similarly last month. This optimism likely contributed to a boost in plans for capital expenditures within the restaurant industry. Fifty-five percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months - up from 53 percent last month.

"The growing optimism among restaurant operators, along with the positive effects on staffing and capital expenditures, bodes well for stronger restaurant industry gains during the second half of the year," said Hudson Riehle, the Association's senior vice president of Research and Information Services. "The industry, however, still has a sizeable distance to go before it fully returns to the robust growth levels of the late 1990s."

Meanwhile, the current situation component of the Restaurant Performance Index posted its second straight monthly increase in April, after declining in four consecutive months. The Current Situation Index, which measures current trends in four industry indicators, increased 1.0 percent in April. Growth in the Current Situation Index was buoyed by increased capital expenditure activity among restaurant operators. Forty-seven percent of restaurant operators made a capital expenditure for equipment, expansion or remodeling during the past three months -- the highest level since November 2002.

Although customer traffic in April remained below its April 2002 level, the general trend appears to be moving in the right direction. Twenty-five percent of restaurant operators reported an increase in customer traffic between April 2002 and April 2003 - up from 22 percent who reported an increase in March and just 19 percent who reported a traffic increase in February. Fifty-six percent of restaurant operators reported a traffic decline in April, while 19 percent reported no change.

On the sales side, 28 percent of restaurant operators reported a same-store sales increase between April 2002 and April 2003 - down slightly from 29 percent who reported an increase in March. Fifty-four percent of restaurant operators reported a same-store sales decline in April, while 18 percent reported no change.

Detailed data and analysis can be found at Restaurant TrendMapper (http://www.restaurant.org/trendmapper), the Association's subscription-based Internet service that provides real-time analysis of restaurant industry trends.

A chart of the April 2003 Restaurant Performance Index is available on the Association's Web site, 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 our Web site at http://www.restaurant.org.