Restaurant Industry Outlook Softened in May as Restaurant Performance Index Posted...

Restaurant Industry Outlook Softened in May as Restaurant Performance Index
Posted First Decline in Five Months

Operators continued to report sales and traffic declines; Outlook for economy
remained positive

WASHINGTON, June 30 /PRNewswire-USNewswire/ -- The outlook for the restaurant
industry was dampened somewhat in May, as the National Restaurant
Association's comprehensive index of restaurant activity registered its first
decline in five months. 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 98.3 in May, down 0.3 percent from April and
its 19th consecutive month below 100.

"With the performance of the current situation indicators holding relatively
steady in May, the RPI's decline was the result of restaurant operators'
dampened outlook for each of the four forward-looking indicators," said Hudson
Riehle, senior vice president of Research and Information Services for the
Association. "Although restaurant operators remain relatively optimistic that
economic conditions will improve in six months, their outlook for sales growth
and capital spending activity softened somewhat."

The RPI 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. The full report is
available online: www.restaurant.org/pdfs/research/index/200905.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 below 100 represent a period of contraction for key industry
indicators.

The Current Situation Index, which measures current trends in four industry
indicators (same-store sales, traffic, labor and capital expenditures), stood
at 96.9 in May - down 0.1 percent from April. In addition, May represented
the 21st consecutive month below 100, which signifies contraction in the
current situation indicators.

Restaurant operators reported negative same-store sales for the 12th
consecutive month in May, with results similar to the April performance.
Twenty-six percent of restaurant operators reported a same-store sales gain
between May 2008 and May 2009, matching the proportion who reported a sales
gain in April. Sixty percent of operators reported a same-store sales decline
in May, compared to 59 percent who reported lower sales in April.

Restaurant operators also reported negative customer traffic levels in May,
marking the 21st consecutive month of traffic declines. Twenty-two percent of
restaurant operators reported an increase in customer traffic between May 2008
and May 2009, compared to 23 percent who reported similarly in April.
Fifty-nine percent of operators reported a traffic decline in May, while 60
percent reported lower traffic in April.

Capital spending activity remained relatively steady, despite the continued
soft sales and traffic levels. Forty-one percent of operators said they made
a capital expenditure for equipment, expansion or remodeling during the last
three months, down from 43 percent who reported similarly last month.

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 99.6 in May - down 0.5 percent
from April and its first decline in six months. April's level of 100.2
represented the first time in 18 months that the Expectations Index surpassed
100, which signifies expansion in the forward-looking indicators.

The May decline in the Expectations Index was due in part to a dampening in
restaurant operators' outlook for sales growth. Twenty-nine percent of
restaurant operators expect to have higher sales in six months (compared to
the same period in the previous year), down from 33 percent last month. In
comparison, 33 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, up from 30 percent who reported similarly last month.

Despite the softer sales outlook, restaurant operators remained relatively
optimistic that the economy will improve in the months ahead. Thirty-four
percent of restaurant operators said they expect economic conditions to
improve in six months, down slightly from 37 percent who reported similarly
last month. Meanwhile, 17 percent of operators expect economic conditions to
worsen in six months, roughly on par with the 16 percent who reported
similarly last month.

After rising to a 10-month high last month, restaurant operators scaled back
on plans for capital expenditures in the months ahead. Forty-one percent of
restaurant operators plan to make a capital expenditure for equipment,
expansion or remodeling in the next six months, down from 46 percent who
reported similarly last month.

While the RPI is 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 service
that provides detailed analysis of restaurant industry trends. Follow
Restaurant TrendMapper on Twitter @trendmapper.

A chart of the May 2009 RPI can be found on the Association's Web site,
www.restaurant.org/pressroom.

Founded in 1919, the National Restaurant Association 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 million employees.
Together with the National Restaurant Association Educational Foundation, the
Association works to lead America's restaurant industry into a new era of
prosperity, prominence, and participation, enhancing the quality of life for
all we serve. For more information, visit our Web site at www.restaurant.org.

SOURCE National Restaurant Association

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