"The solid index performance in December was buoyed by positive same-store sales and an increasingly optimistic outlook in terms of sales growth and the direction of the economy," the NRA said in its statement, adding that the growth outlook remains strong.
"Looking at the Restaurant Performance Index on a quarterly basis, the trends are even more impressive. The index rose a solid 1.6% between the third and fourth quarters of 2003, bolstered by strong gains in both the current situation and expectations components," said Hudson Riehle, NRA senior vice-president of research and information services. "In addition, the Expectations Index registered gains during each of the four quarters of 2003, which bodes well for continued industry growth in 2004."
December's Restaurant Performance Index remained strong as a result of relatively steady performances in both components of the index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), edged down a modest 0.1% in December, the NRA reported.
For the fifth consecutive month, restaurant operators reported positive same-store sales. Forty-nine percent of restaurant operators reported a same-store sales increase between December 2002 and December 2003, up from 46% who reported a same- store sales gain in November. Meanwhile, only 35% of operators reported a same-store sales decline between December 2002 and December 2003.
Customer traffic results showed a slight decline in December. Thirty-eight percent of restaurant operators reported an increase in customer traffic between December 2002 and December 2003, matching the proportion that registered an increase in November. However, 41% of operators reported a decline in customer traffic in December, up from 38% who reported similarly in November.
The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, increased 0.1% in December. The December gain followed a stronger 0.5% gain in November, and marked the sixth consecutive monthly increase in the Expectations Index.
Restaurant operators continue to be optimistic about short-term sales growth in their establishments. More than three out of five restaurant operators (62%) expect to have higher sales in six months (compared to the same period in the previous year), marking the third consecutive month with a level of 60% or greater. Meanwhile, only 11% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year.
Restaurant operators also remain confident in the direction of the overall economy. Sixty-three percent of restaurant operators expect economic conditions in six months to be better than they are now, matching the strong level posted last month. Only 4% of restaurant operators expect economic conditions to worsen in six months.
This optimism is also contributing to a boost in plans for capital expenditures within the restaurant industry. Sixty-four percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, the strongest level on record.