Concerns Growing Over Economy’s Direction Even as Sales Improve

Restaurant operators reported increased sales and strong capital spending activity in the latest monthly Restaurant Performance Index (RPI) from the National Restaurant Association.

The RPI stood at 103.7 for March, down slightly from 103.8 in February. The measurement tracks the health and outlook of the U.S. restaurant industry by surveying operators on the current situation and expectations for the next six months. Any value above 100 represents a period of expansion while a number below 100 represents contraction.

The Current Situations Index was 104.6 in March, the same as February. The strong number shows that the industry remains on a path toward recovery from the COVID-19 pandemic, the association said. The positive results were due to the continued improvements the industry is experiencing. Seventy-five percent of restaurant operators reported that same-store sales rose between March 2021 and March 2022, while only 10 percent said their sales were lower year-over-year. Further, customer traffic remains strong. Sixty-nine percent of operators had more customers in March 2022 than the year before, while only 17 percent reported a decline.

Those results at least partially match findings from Black Box Intelligence, which found that restaurant sales growth has been stable since mid-March. The segments with the strongest sales growth for the week ending May 15 were fine dining, upscale casual and fast casual, the data and insights provider said.

The future is a little less certain, however. The RPI’s Expectations Index fell 0.2 percent from February to 102.8, the third consecutive monthly decline. Fifty-nine percent of operators expect their sales volume to be higher in the next six months than compared to the year before. Although the majority expect improved sales, they were wearier of the overall economy. Only 28 percent of operators said they expect economic conditions to improve in six months, while 33 percent believe they will worsen – marking the second consecutive month where more operators had a negative outlook for the economy.

Despite that uncertainty, operators continue to invest in their equipment. Sixty-five percent of restaurants said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 71 percent in February. Looking ahead, 63 percent of operators plan to make a capital expenditure within the next six months, down from 71 percent the month before. Still, those results represent the sixth consecutive month with a reading above 60 percent for future spending.