By Karen Axelton
The restaurant industry struggled through a tough few years as the Great Recession slashed consumers’ spending on eating out. But the latest data from the National Restaurant Association and other industry trend-trackers indicate the industry may finally be out of the woods.
For the fourth month in a row, the National Restaurant Association’s Restaurant Performance Index (RPI) was above 100, indicating solid performance. “A strong majority of restaurant operators reported positive same-store sales and traffic results,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the Association. “In addition, restaurant operators are bullish about sales growth in the months ahead, while their outlook for the economy remains cautiously optimistic.”
“Perhaps the most positive indicator is the optimistic outlook for staffing levels in the months ahead,” Riehle added. “Only 7 percent of restaurant operators expect to reduce staffing levels in the next six months, the lowest level in nearly eight years.”
Sixty-three percent of restaurant owners had a same-store sales gain between February 2011 and February 2012, and 55 percent reported higher customer traffic in February 2012 as compared to February 2011. Just 19 percent reported a traffic decline.
Buoyed by the positive sales, restaurant owners are reporting more capital spending. Forty-seven percent said they had made a capital expenditure for equipment, expansion or remodeling in the last three months, up from 42 percent who reported similarly last month.
The Expectations Index, which measures restaurant operators’ six-month outlook, was optimistic for the sixth consecutive month. Fifty-three percent of restaurant operators expect to have higher sales in six months; just 9 percent expected their sales to drop.
Restaurant operators are also fairly optimistic about the direction of the overall economy. Thirty-five percent of restaurant operators said they expect economic conditions to improve in six months; just 14 percent expect them to worsen.
Based on this optimistic outlook, 24 percent of restaurateurs planned to hire in the next six months, and 49 percent plan to make a capital expenditure for equipment, expansion or remodeling in that time frame.
Some other key restaurant industry indicators are positive as well, eMarketer reports. Packaged Facts recently estimated that U.S. restaurant sales will grow 4.2 percent in 2012, and estimated that full-service restaurants’ sales grew 8.1 percent last year.
A recent customer survey by Mintel, reported in eMarketer, found that 65 percent of consumers who had visited a restaurant in the past month plan to spend the same amount at restaurants in 2012 as in 2011, and 12 percent plan to spend more this year. Among that 12 percent, 59 percent said they will spend more in casual restaurants, and 57 percent said they will spend more in family restaurants.
Image by Flickr user Hallenser (Creative Commons)