(Washington, DC) The outlook for the restaurant industry grew increasingly optimistic in February, as the National Restaurant Association's comprehensive index of restaurant activity soared to another record level. The Association's Restaurant Performance Index – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – jumped 1.6 percent above its strong January level. February's robust increase followed a strong 1.0 percent gain in January, with both performances driven by broad-based growth across Index components.

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 Index consists of two components – the Current Situation Index and the Expectations Index. (Click on the following link to view this month's Index report:http://www.restaurant.org/pdfs/research/index/200402.pdf).

"Seven out of ten restaurant operators reported a same-store sales gain in February – the strongest level on record for the Restaurant Performance Index. With same-store sales results buoyed by the extra day in February this year, the magnitude of the gains indicates that sales would have been positive even in the absence of leap year," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "In addition, the Expectations Index posted its eighth consecutive monthly increase, which points toward growth in sales, employees and capital expenditures during the next several months."

The February increase in the Restaurant Performance Index was fueled by strong growth in the current situation component of the Index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), jumped 2.7 percent in February – bolstered somewhat by the extra day in February.

For the second consecutive month, a majority of operators reported an increase in same-store sales. Seventy percent of restaurant operators reported a same-store sales gain between February 2003 and February 2004 – up from 54 percent who reported a sales gain in January. In contrast, only 17 percent of operators reported a same-store sales decline between February 2003 and February 2004. February marked the seventh consecutive month of positive same-store sales.

Customer traffic results were also robust in February. Sixty-one percent of restaurant operators reported an increase in customer traffic between February 2003 and February 2004 – up from 44 percent who registered an increase in January. Meanwhile, only 20 percent of operators reported a traffic decline in February – down from 35 percent who reported a decline in January.

The Expectations Index, which measures restaurant operators' six-month outlook for four industry indicators, gained 0.4 percent in February. February's gain marked the eighth consecutive monthly increase in the Expectations Index, which sets the stage for continued restaurant industry growth during the next several months.

In addition to the positive sales trends in recent months, restaurant operators are increasingly optimistic about continued sales growth in their establishments. Seventy-two percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year) – up from 68 percent last month and the strongest level on record. In contrast, only 5 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.

Held up by their optimistic expectations for sales growth, restaurant operators are beefing up plans for staffing increases during the next several months. Thirty-five percent of operators expect to have higher staffing levels in six months (compared to the same period in the previous year), while only nine percent of operators expect to employ fewer workers in six months.

In addition to their positive outlook for sales and staffing growth, a growing proportion of restaurant operators are making plans for new capital expenditures. Seventy-one 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.

While the Restaurant Performance Index 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 real-time analysis of restaurant industry trends.

Restaurant Performance Index
June 2002 = 100

The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 878,000 restaurant and foodservice outlets and a work force of 12 million employees - making it the cornerstone of the economy, career 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.

Katharine Kim
202-973-3677
National Restaurant Association