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Restaurant operators remain optimistic about sales growth and the economy in the months ahead, though same-store sales and traffic levels softened in May

WASHINGTON, June 30 /PRNewswire-USNewswire/ — The outlook for the restaurant industry softened in May, as the National Restaurant Association’s comprehensive index of restaurant activity fell below 100 for the first time in three months.  The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 99.7 in May, down 0.7 percent from April’s level of 100.4.  The RPI’s May drop came after strong index growth earlier this year and amid sharply increasing wholesale food prices.

“Although the sales and customer traffic indicators softened in May, capital expenditure activity rose to its highest level in nearly two years,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association.  ”This, along with a continued positive outlook for sales and the overall economy, signals that restaurant operators remain optimistic that business conditions will improve in the months ahead.”

Visit the Association’s website to view a video of Riehle providing an industry update – www.restaurant.org.

The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100.  Index values above 100 indicate that key industry indicators are in a period of expansion, and index values below 100 represent a period of contraction for key industry indicators.  The RPI consists of two components, the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 98.7 in May – down 0.3 percent from its April level.  The Current Situation Index remained below 100 for the 33rd consecutive month, which signifies contraction in the current situation indicators.

Restaurant operators reported a net decline in same-store sales for the second consecutive month in May.  Thirty-five percent of restaurant operators reported a same-store sales gain between May 2009 and May 2010, down from 39 percent of operators who reported higher sales in April.  In comparison, 46 percent of operators reported a same-store sales decline in May, up from 41 percent of operators who reported negative sales in April.

Restaurant operators also reported softer customer traffic results in May.  Thirty-three percent of restaurant operators reported an increase in customer traffic between May 2009 and May 2010, down from 37 percent who reported higher customer traffic in April.  Meanwhile, 43 percent of operators reported a traffic decline in May, up from 39 percent who reported lower traffic in April.

Full Story: PR Newswire