Restaurant Industry Continues To Expand Despite Concerns

In spite of a rash of economic challenges in the past few months, the restaurant industry continued to expand in May, according to the latest data from the National Restaurant Association’s Restaurant Performance Index. While operators showed concern about the six-month outlook in the survey, capital spending and spending plans increased.

The overall index ticked down slightly for the second month in a row in May, falling 0.2 point to 101.4. It was the seventh consecutive month the index has been above the 100 level that separates expansion from contraction. Four of the eight components fell in May.

In the Current Situation Index, the indicators of current same-store sales and labor environment were flat while that for customer traffic fell 1.3 points. The CSI was off 0.2 point.

Three of the four markers in the Expectations Index declined. The six-month outlook for same-store sales fell 0.3 point, the staffing outlook indicator was off 0.6 point and operators’ view of overall business conditions dropped 0.7 point. All still remain well above the 100 tipping point, however.

Both capital spending indicators rose in the May survey. The Current Situation marker tracking operators that made a capital expenditure in the past three months rose half a point; 46% of surveyed operators reported a purchase, up from 44% in April. The indicator for those planning a capital buy over the next six months also rose, up 0.6 point, with 55% saying they plan such a purchase, up from 52% in April.

Falling gasoline prices and frugality fatigue seem to be propping up restaurant sales, even as consumer confidence has fallen and jobs growth has weakened during the past two months.