Restaurant Performance Index declines in May

by Keith Nunes
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WASHINGTON — The National Restaurant Association’s Restaurant Performance Index (R.P.I.) for May declined 0.3% when compared to the month of April and stood at 98.3. It was the first time the R.P.I. had declined during the past five months.

"With the performance of the current situation indicators holding relatively steady in May, the R.P.I.’s decline was the result of restaurant operators’ dampened outlook for each of the four forward-looking indicators," said Hudson Riehle, senior vice-president of research and information services for the N.R.A. "Although restaurant operators remain relatively optimistic that economic conditions will improve in six months, their outlook for sales growth and capital spending activity softened somewhat."

The R.P.I. is based on the responses to the N.R.A.’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 R.P.I. consists of two components — the current situation index and the expectations index.

The current situation index stood at 96.9 in May — down 0.1% from April. Restaurant operators reported negative same-store sales for the 12th consecutive month in May, with results similar to the April performance. Twenty-six per cent of restaurant operators reported a same-store sales gain between May 2008 and May 2009, matching the proportion who reported a sales gain in April. Sixty per cent of operators reported a same-store sales decline in May, compared with 59% who reported lower sales in April.

The expectations index stood at 99.6 in May — down 0.5% from April and its first decline in six months. The May decline in the expectations index was due in part to a dampening in restaurant operators’ outlook for sales growth. Twenty-nine per cent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 33% last month. In comparison, 33% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, up from 30% who reported similarly last month.

Despite the softer sales outlook, restaurant operators remained optimistic that the economy will improve in the months ahead. Thirty-four per cent of operators said they expect economic conditions to improve in six months, down slightly from 37% who reported similarly last month. Meanwhile, 17% of operators expect economic conditions to worsen in six months, roughly on par with the 16% who reported similarly last month.

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