• by Karlene Lukovitz  @KLmarketdaily, May 4, 2009

Although hardly signaling a recovery, some of the most recent monthly indicators from the National Restaurant Association offer glimmers of improvement amid the discouraging trends of the past year and a half.

The association's Restaurant Performance Index (RPI), a monthly composite index that tracks the current overall health and outlook for the industry, was at 97.7 in March. While any index score below 100 indicates contraction -- and March marked the 17th consecutive month below 100 -- the 97.7 reading was up 0.2% from February, and the RPI has risen 1.3% over the last three months.

In addition, restaurant operators reported a positive six-month economic outlook for the first time in 18 months, and capital spending plans rose to a nine-month high, pointed out Hudson Riehle, SVP research and information services for the association. Riehle termed these "clear signs of improvement."

Predictions of sales growth also improved a bit, with 30% now saying they expect to have higher sales in six months (compared to the same period in the previous year) -- up from 25% who reported similarly in February. Also, the number that expected sales volume to decline over the next six months decreased to 38% in March, versus 41% in February. On the other hand, the Current Situation Index, which measures trends in same-store sales, traffic, labor and capital expenditures, stood at 96.1 in March -- down 0.4% from February and the first decline in three months. March marked the 19th consecutive month that this index has been below 100.

Restaurant operators reported negative same-store sales for the 10th consecutive month in March, although declines partially reflected Easter falling in April rather than March this year. Nearly two-thirds (63%) reported same-store sales declines in March (up from 56% reporting negative sales in February), while 24% reported same-store sales gains (down from 29% in February).

Operators also reported negative overall customer traffic levels for the 19th consecutive month. Sixty-three percent reported traffic declines (versus 59% reporting declines in February), while 20% reported traffic increases (versus 22% reporting gains in February).

Darren Tristano, EVP at restaurant industry consulting group Technomic Inc., says that restaurant lunch traffic seems to be showing a bit of improvement -- perhaps indicating that traffic declines are "bottoming out" -- but dinner traffic is still extremely challenged, as full-service and banquet business is down dramatically.

Also, traffic volume is being driven by value-priced items, which means that "margins in an already low-margin business are getting slimmer and slimmer," Tristano says.