• by Karlene Lukovitz  @KLmarketdaily, March 31, 2010

Two separate, just-released indicators - the National Restaurant Association's latest operator index results and new performance data from The NPD Group -- point to signs of a bit of an improvement in the outlook for the restaurant industry this year. 

Restaurant operators' increasing optimism about sales growth, capital spending plans and staffing levels pushed the restaurant association's Restaurant Performance Index (RPI), a monthly composite reflecting overall health/outlook for the industry, up to its highest level in more than two years.

An RPI of 100 indicates industry stability, and the index had as of January been below 100 for 27 consecutive months. However, in February, it nearly reached the stable level, rising 0.7% (versus January), to reach 99.

"The RPI's strong gain in February was the result of broad-based improvements among the forward-looking indicators," said Hudson Riehle, SVP for the association's Research and Knowledge Group. "Restaurant operators' optimism for sales growth stood at its strongest level in 29 months, with capital spending plans also rising to a two-year high.

"In addition, restaurant operators reported a positive outlook for staffing gains for the first time in more than two years. This bodes well for replacing the more than 280,000 eating and drinking place jobs lost during the recession."

On a second front, NPD's weekly data from 47 U.S. restaurant chains has shown same-store sales on the increase for four out of the last five weeks, NPD restaurant industry analyst Bonnie Riggs tells Marketing Daily.

"There is still weakness in the industry, but we're starting to see the proverbial light at the end of the tunnel," Riggs says. "GDP is up, and consumer spending and retail sales were up last month. Moreover, the consumer confidence level -- a very key metric for restaurant analysts -- is up. When consumer confidence rises, traffic usually starts to improve shortly after."

NPD is still predicting that traffic will be weak through the third quarter, but Riggs expects declines to be progressively smaller as the year wears on. "Consumers will still be looking for the best value they can find," she adds, "but they're starting to feel more optimistic and spend more -- and that's what's needed to pull us out of this mess."

Last year, overall U.S. restaurant traffic declined 3%, according to NPD. Check size was up 1.9%, to $6.47, but that wasn't enough to offset the revenue losses from traffic (total dollars spent declined 1.2%). In 2008, check size grew 1.8%, to $6.35, traffic declined 0.2%, and sales rose by 2.1%.