Friday, April 30, 2010

Restaurant Index shows Expansion in March

by Bill McBride on 4/30/2010 02:41:00 PM

This is one of several industry specific indexes I track each month.

Restaurant Performance Index Click on graph for larger image in new window.

This is the first time in 29 months that the index is showing expansion.

Unfortunately the data for this index only goes back to 2002.

Note: Any reading above 100 shows expansion for this index.

From the National Restaurant Association (NRA): Restaurant Industry Outlook Continues to Improve as Restaurant Performance Index Tops 100 for the First Time in More Than Two Years

[T]the National Restaurant Association’s Restaurant Performance Index (RPI) ... stood at 100.5 in March, up 1.4 percent from February and its strongest level since September 2007. In addition, the RPI rose above 100 for the first time in 29 months, which signifies expansion in the index of key industry indicators.

The RPI’s solid performance in March was driven by improvements among both the current-situation and forward-looking indicators,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “Restaurant operators reported net gains in both same-store sales and customer traffic in March, the first time in 31 months that both indicators stood in positive territory.”

“In addition, restaurant operators are increasingly optimistic about growth in sales and staffing levels in the months ahead, while their outlook for the economy soared to its strongest level in five years,” Riehle added.
...
For the first time in 22 months, restaurant operators reported net positive same-store sales.
...
Restaurant operators also reported a net increase in customer traffic in March, the first positive reading in 31 months.
emphasis added
Restaurants are a discretionary expense, and they tend to be 'first in, last out' of a recession for consumer spending (as opposed to housing that is usually first in and first out).