The restaurant industry is facing tough economic times, with the National Restaurant Association’s Restaurant Performance Index falling to its lowest level on record at 97.9 in March, down 0.9 from February. A reading below 100 signifies contraction.

Twenty-five percent of restaurant operators surveyed said the economy is the biggest challenge they face, followed by food costs (22 percent), building and maintaining sales volume (16 percent) and recruiting and retaining employees (14 percent).

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures) stood at 97.1 in March, down 1.5 from February and the lowest level in more than five years.

Only 28 percent of restaurant operators reported a same-store sales gain between March 2007 and March 2008, down from 44 percent who reported year-over-year sales gains in February. Only 19 percent had an increase in customer traffic compared with the year-ago period and 41 percent made a capital expenditure for equipment, expansion or remodeling in the last three months.