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Restaurant Performance Index Jumped in December to Its Highest Level in Six Months

Posted on: Tuesday, 31 January 2006, 12:00 CST

WASHINGTON, Jan. 31 /U.S. Newswire/ -- The outlook for the restaurant industry grew increasingly optimistic in December, as the National Restaurant Association's comprehensive index of restaurant activity registered a solid gain. The Association's Restaurant Performance Index -- a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry -- stood at 102.0 in December, up 0.5 percent from its November level and the strongest level in six months. December also represented the 32nd consecutive month above 100 -- a level which represents expansion in the Association's composite index of eight key industry indicators.

"Fueled by strong same-store sales, December's solid index performance was the result of broad-based growth across the index components," said Hudson Riehle, senior vice president of Research and Information Services for the Association. "Three out of five restaurant operators reported a same-store sales gain in December -- the strongest level in 12 months. In addition, the Expectations Index posted its fourth consecutive monthly increase, which points toward growth in sales, staffing levels and capital expenditures during the next several months."

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. (To view this month's Index report, go to: http:// www.restaurant.org/pdfs/research/index/200512.pdf).

The December increase in the Restaurant Performance Index was driven by gains in both the current situation and expectations components of the index. The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 101.1 in December -- up a solid 0.7 percent from its November level.

Growth in the Current Situation Index was driven by a solid same- store sales performance in December. Sixty percent of restaurant operators reported a same-store sales gain between December 2004 and December 2005 -- up from 51 percent of operators who registered a sales gain in November. Twenty-five percent of operators reported a same-store sales decline between December 2004 and December 2005, while 15 percent of operators reported no change in sales.

Restaurant operators also reported a solid improvement in customer traffic. Forty-eight percent of restaurant operators reported an increase in customer traffic between December 2004 and December 2005 -- up from 40 percent who reported traffic gains in November. Thirty-one percent of operators reported traffic declines in December, while 21 percent reported no change in customer traffic.

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 102.8 in December -- up from 102.6 in November and its fourth consecutive monthly gain.

A growing proportion of restaurant operators are optimistic about sales growth in the coming months. Fifty-eight percent of restaurant operators expect their sales volume in six months to be higher than it was during the same period in the previous year -- up from 52 percent who reported similarly last month. In contrast, just nine percent of restaurant operators expect their sales in six months to be lower than it was during the same period in the previous year.

While the outlook for sales improved, restaurant operators are slightly less optimistic about the direction of the overall economy. Thirty-eight percent of operators expect economic conditions to improve in six months -- down from 41 percent last month. Ten percent of operators said they expect economic conditions to worsen in six months, while 52 percent expect economic conditions to remain about the same.

Another positive indicator is the continued strong outlook for capital expenditure activity in the restaurant industry. Sixty percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, the third consecutive month at a level of 60 percent or higher.

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 (http:// www.restaurant.org/trendmapper) , the Association's subscription- based Web site that provides detailed analysis of restaurant industry trends.

Additional outlook information for 2006 -- including economic, segment, consumer, workforce and state/regional trends -- can be found in the National Restaurant Association's 2006 Restaurant Industry Forecast. For details, visit the National Restaurant Association's Web site at http://www.restaurant.org/forecast. To order the Forecast ($24.95 for Association members and $49.95 for non-members), call 1-800-482-9122, or visit the Association's online store.

A chart of the December 2005 Restaurant Performance Index is available on the Association's Web site, http://www.restaurant.org/ pressroom.

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The National Restaurant Association, founded in 1919, is the leading business association for the restaurant industry, which is comprised of 925,000 restaurant and foodservice outlets and a work force of 12.5 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 their Web site at http://www.restaurant.org.

http://www.usnewswire.com

Source: U.S. Newswire

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