• by Karlene Lukovitz , June 1, 2009

RBC Capital Markets is reporting that its May Restaurant Spending Survey shows a definite trend in the right direction.

The RBC survey of planned spending in restaurants among more than 1,000 consumers, which the firm says is 70% predictive of restaurant comparable-store sales, showed its biggest increase since November 2006 (+1,000 basis points).

The gain seen in plans to spend more over the next 90 days was the strongest since November 2007. Among May respondents, 10% said they plan to spend more (versus 6% in April) and 38% (versus 44% in April) said they plan to spend less during that time frame. RBC analysts, however, noted that the effects of last year's tax stimulus may hide spending improvements occurring over the next few months.

The best news was in the casual dining sector: In May, spending intentions for casual-plus and moderate casual restaurants jumped 12 points and 11 points, respectively, in comparison with February. In the moderate segment, the numbers planning to spend more and to spend less were both at 12%, versus February's numbers of 20% planning to spend less and 9% planning to spend more.

The quick-casual and fine-dining segments also saw improvement, although fast food lost a point, RBC reported.

The brands seeing the strongest gains in planned spending were Outback, IHOP and Applebee's, followed by Mimi's Café, Cracker Barrel and Morton's. Jack in the Box and Tim Horton's performed strongly within the fast food segment. Starbucks showed the strongest gain among coffee restaurants (up 900 basis points). However, 19% of consumers said they plan to spend less at the chain in the next 90 days, versus 8% planning to spend more. Also, McDonald's picked up 5 points among consumers planning to spend less at Starbucks.

The National Restaurant Association (NRA)'s latest news is also relatively positive, for the fourth month in a row. The association's Restaurant Performance Index -- the monthly composite index tracking the industry's overall health based on surveys of restaurant operators -- rose 0.8% between March and April, to 98.6. While any number below 100 indicates retraction, the index has been creeping up since January, and this was its highest level in 11 months.

The growth was driven by the Expectations sub-index -- which rose above 100 for the first time in 18 months, points out Hudson Riehle, the NRA's SVP of research and information services. Operators reported a positive six-month outlook for sales growth for the first time in 15 months.

Traffic and sales continued to lag, however. The Current Situation sub-index, which measures trends in same-store sales, traffic, labor and capital expenditures, stood at 97.0 in April -- up 0.9% from March and its highest level since August 2008, but still representing the 20th consecutive month below 100 for this gauge.