Restaurant Performance Index Remains Below 100 for Fourth Consecutive Month in February

Restaurant Performance Index Remains Below 100 for Fourth Consecutive Month in
February

Leap Year bolstered sales; Operators are less optimistic about sales growth
and the economy

WASHINGTON, March 31 /PRNewswire-USNewswire/ -- The outlook for the restaurant
industry remained uncertain in February, as the National Restaurant
Association's comprehensive index of restaurant activity was unchanged. The
Association's Restaurant Performance Index (RPI) - a monthly composite index
that tracks the health of and outlook for the U.S. restaurant industry - stood
at 98.8 in February, its fourth consecutive month below 100, signifying
contraction in the index.

"Although restaurant operators reported positive sales for the first time in
four months, they were less optimistic about growth in the months ahead," said
Hudson Riehle, senior vice president of Research and Information Services for
the Association. "Operators' outlook for sales growth and the economy
deteriorated sharply, which led to a record-low reading in restaurant
operators' outlook and expectations."

"For the first time in 29 months, recruiting and retaining employees was not
the top challenge reported by restaurant operators," Riehle added.
"Twenty-six percent of operators identified the economy as the number-one
challenge facing their business, the highest proportion in the history of the
Restaurant Performance Index. Food costs ranked second at 19 percent, while
'building and maintaining sales volume' and 'recruiting and retaining
employees' were each identified as the top challenge by 15 percent of
operators."

The Restaurant Performance Index 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 RPI consists of
two components - the Current Situation Index and the Expectations Index.
(Follow this link to view this month's report:
www.restaurant.org/pdfs/research/index/200802.pdf).

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 under 100 represent a period of contraction for key industry
indicators. Customer traffic and same-store sales indicators of the RPI are
measured in comparison to the same month the previous year rather than in
relation to the previous month.

The Current Situation Index, which measures current trends in four industry
indicators (same-store sales, traffic, labor and capital expenditures), stood
at 98.6 in February - up 0.7 percent from January and its first gain in six
months. Despite the gain, February marked the sixth consecutive month below
100, which signifies contraction in the current situation indicators.

Bolstered by the extra February day as a result of Leap Year, restaurant
operators reported positive same-store sales for the first time in four
months. Forty-four percent of restaurant operators reported a same-store
sales gain between February 2007 and February 2008, up from 36 percent who
reported a sales gain in January. Thirty-nine percent of operators reported a
same-store sales decline in February, down from 49 percent who reported
similarly in January.

Restaurant operators continued to report negative customer traffic levels in
February, though the performance was somewhat better than recent months.
Thirty-two percent of restaurant operators reported an increase in customer
traffic between February 2007 and February 2008, up from 27 percent who
reported similarly in January. Forty-six percent of operators reported a
traffic decline in February, down from 54 percent who reported similarly in
January.

Restaurant operators continued to report a decline in capital spending
activity. Forty percent of operators said they made a capital expenditure for
equipment, expansion or remodeling during the last three months, down from 41
percent last month and the lowest level in the history of the Restaurant
Performance Index.

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 99.1 in February - down 0.6
percent from January and its lowest level on record.

Restaurant operators remain decidedly pessimistic about the direction of the
economy. Just 14 percent of operators expect economic conditions to improve
in six months, down from 21 percent who reported similarly last month and the
lowest level on record. Forty-six percent of operators said they expect
economic conditions to worsen in six months, up from 37 percent who reported
similarly last month and the highest level on record.

Restaurant operators are also less optimistic about sales growth in coming
months. Thirty percent of restaurant operators expect to have higher sales in
six months (compared to the same period in the previous year), down from 32
percent who reported similarly last month. Thirty-four 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, compared to 31 percent who
reported similarly last month.

Roughly one-half of restaurant operators have plans for capital spending in
the next six months. Fifty-one percent of restaurant operators plan to make a
capital expenditure for equipment, expansion or remodeling in the next six
months, up slightly from 50 percent who reported similarly last month.

While the RPI is consistently released on the last business day of each month,
more detailed data and analysis can be found on Restaurant TrendMapper
(www.restaurant.org/trendmapper), the Association's subscription-based Web
site that provides detailed analysis of restaurant industry trends.

A chart of the February 2008 Restaurant Performance Index is available on the
Association's Web site, www.restaurant.org/pressroom.

The National Restaurant Association, founded in 1919, is the leading business
association for the restaurant industry, which is comprised of 945,000
restaurant and foodservice outlets and a work force of 13.1 million employees
- making it the cornerstone of the economy, career and employment
opportunities and community involvement. Along with the National Restaurant
Association Educational Foundation, the Association works to represent,
educate and promote the rapidly growing industry. For more information, visit
our Web site at www.restaurant.org.

SOURCE National Restaurant Association

Annika Stensson, +1-202-973-3677, or Mike Donohue, +1-202-331-5902,
media@restaurant.org, both of the National Restaurant Association