Restaurant Performance at
Pre-recession Levels

by Steve Meyer & Len Steiner

The apparent meat and poultry demand doldrums of March had little to do with the restaurant sector as the National Restaurant Association (NRA) Restaurant Performance Index rose to its highest level since before the onset of the Great Recession.

The index rose 0.3 points in March to reach 102.2. That is the same figure as December 2011, before the index dipped sharply in January. The December and March levels are the highest since March 2007. The index bottomed in late 2008 at just over 96.

The index is constructed to make 100 the dividing line between expansion and contraction. March's results mark the seventh straight month of expansionary index levels. That's the longest string of expansionary months since before the recession. The chart shows the monthly indexes back to January 2003.

Note that the Restaurant Performance Index is a composite of current situation and expectations components. Since mid-2011, the current situation component has been as much of a positive driver of the index as the expectations component. That is in sharp contrast to the component drivers during the recession when expectations were the primary driver. It is good that restaurant owners are optimists, we suppose, but it is far better when actual results are matching their outlooks.

According to NRA's press release, the March current situation strength was driven by "solid majorities of operators reporting higher same-store sales and higher customer traffic levels in March." Sixty-five percent of survey respondents reported higher same-store sales in March 2012 vs. March 2011. Only 21% reported lower sales this year.

Editor's Note: The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe, visit www.dailylivestockreport.com.

---