Restaurant conditions improve

The Restaurant Performance Index is at its highest level in 11 months, according to the National Restaurant Association.

The association’s index — a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry — was 98.6 in April, up 0.8% from March, its highest level in 11 months. 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 recent growth in the RPI was driven by the Expectations component, which rose above 100 in April for the first time in 18 months, a level which indicates expansion," said Hudson Riehle, senior vice president of Research and Information Services for the association. “Although the RPI’s Current Situation indicators are still in a period of contraction, the solid improvement in the forward-looking indicators suggests that the end of the industry’s downturn may be in sight.”

The index is determined through a survey of restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures.

Findings of the index include:
• Twenty-six percent of restaurant operators reported a same-store sales gain between April 2008 and April 2009, up slightly from 24% who reported a sales gain in March.

• Fifty-nine percent of operators reported a same-store sales decline in April, down from 63% who reported negative sales in March.

• Restaurant operators reported negative customer traffic levels for the 20th consecutive month in April. Twenty-three percent of restaurant operators reported an increase in customer traffic between April 2008 and April 2009, up from 20% who reported similarly in March.

• Forty-three percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, the highest level in 10 months.

• For the first time in 15 months, restaurant operators reported a positive six-month outlook for sales growth. Thirty-three percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 30% last month and the highest level in 18 months.

• Thirty-seven percent of restaurant operators said they expect economic conditions to improve in six months, up from 30% who reported similarly last month and the highest level in three years.

(Link here for the most recent association PDF report on Arkansas’ restaurant industry.)