Driven by solid same-store sales and traffic results and an increasingly bullish outlook among restaurant operators, the National Restaurant Association's Restaurant Performance Index (RPI) matched its post-recession high in March. The RPI - a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry - stood at 102.2 in March, up 0.3 percent from February and equaling its post-recession high that was previously reached in December 2011. In addition, the RPI stood above 100 for the fifth consecutive month in March, which signifies expansion in the index of key industry indicators.

"The first quarter finished strong with a solid majority of restaurant operators reporting higher same-store sales and customer traffic levels in March," said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. "In addition, restaurant operators are solidly optimistic about sales growth and the economy in the months ahead, which propelled the Expectations component of the RPI to its highest level in 15 months."

"Bolstered by improving sales and traffic results, restaurant operators' outlook for capital spending reached its highest level in more than four years," Riehle added. "This will have positive implications throughout the supply chain of the restaurant industry."

The RPI 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, while index values below 100 represent a period of contraction for key industry indicators. The Index 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 102.0 in March - up 0.1 percent from February's level of 101.9. The Current Situation Index remained above 100 for the fifth consecutive month, which signifies expansion in the current situation indicators.

Restaurant operators reported positive same-store sales for the tenth consecutive month in March, with sales results similar to their February performance. Sixty-five percent of restaurant operators reported a same-store sales gain between March 2011 and March 2012, up slightly from 63 percent who reported a sales gain in February. Meanwhile, 21 percent of operators reported lower same-store sales in March, compared to 18 percent who reported similarly in February.

Restaurant operators also reported positive customer traffic results in March. Fifty-five percent of restaurant operators reported higher customer traffic levels between March 2011 and March 2012, while 24 percent reported a traffic decline. In February, 55 percent of operators reported higher customer traffic, while 19 percent reported a traffic decline.

Buoyed by improving sales and traffic levels, restaurant operators continued to report solid capital spending activity. Forty-eight percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, which ties for the highest level reported since before the recession.

The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 102.4 in March - up 0.4 percent from February and the strongest level in 15 months. March also represented the seventh consecutive month that the Expectations Index stood above 100, which signifies a positive outlook among restaurant operators for business conditions in the months ahead.

For the fourth consecutive month, a majority of restaurant operators expect their sales to be higher in the months ahead. Fifty-three percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), matching the proportion who reported similarly last month. In comparison, only nine percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, also unchanged from last month.

Restaurant operators are also generally optimistic about the direction of the overall economy. Thirty-eight percent of restaurant operators said they expect economic conditions to improve in six months, up from 35 percent last month. In comparison, 12 percent of operators said they expect economic conditions to worsen in the next six months, down slightly from 14 percent who reported similarly last month.

For the sixth consecutive month, restaurant operators reported higher expectations for staffing levels in the months ahead. Twenty-seven percent of restaurant operators plan to increase staffing levels in six months (compared to the same period in the previous year), while just 10 percent said they expect to reduce staffing levels in six months.

Along with a positive outlook for sales growth and the economy, restaurant operators are boosting their plans for capital spending in the months ahead. Fifty-six percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 49 percent last month and the strongest level in more than four years.

The RPI 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 full report and a video summary are available online.

The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper, the Association's subscription-based service that provides detailed analysis of restaurant industry trends.

Source: National Restaurant Association