Restaurants have been among the strongest consumer sectors during 2015, with sales rising in eight of the last nine months. While the recent trends are positive, a new survey indicates that seven in 10 consumers are still holding back on spending in some fashion, which leaves room for additional sales growth in the months ahead, according to the NRA’s Chief Economist Bruce Grindy. His Economist’s Notebook commentary and analysis appears regularly on Restaurant.org and Restaurant TrendMapper.
Restaurants were one of the bright spots in an otherwise lackluster October retail sales report, according to preliminary data from the U.S. Census Bureau. Eating and drinking place sales totaled $52.3 billion on a seasonally-adjusted basis in October, which represented a solid 0.5 percent increase over September’s downward-revised sales volume of $52.1 billion.
In contrast, overall retail sales rose just 0.1 percent in October, after remaining essentially flat in both August and September.
October marked the eighth restaurant sales gain in the last nine months. During this nine-month period, average monthly sales volume rose by nearly $2.0 billion.
While the recent upward trajectory in restaurant sales is a positive sign for the industry, new research indicates that seven in 10 consumers are still holding back on spending in some fashion. According to a national survey conducted October 22-25 by ORC International for the National Restaurant Association, less than three in 10 adults (27 percent) say they “are confident in their financial situation and are not holding back on spending.”
Meanwhile, 32 percent of adults say they “are very concerned about the economy and are holding back significantly on spending,” while 38 percent say they “are taking the wait and see approach and are holding back somewhat on spending until the economy improves.”
Looking inside the data, younger adults are the most bullish about their current spending potential. Only 21 percent of adults between the ages of 18 and 34 say they are holding back significantly on spending, compared to nearly four in 10 of their counterparts aged 35 or older.
Not surprisingly, higher-income households are more confident in their personal finances. Nearly one-half of consumers in households with income of $75,000 or more say they are not holding back on spending, compared to less that one in four adults in households below that income threshold.
Even so, that still leaves one-half of higher-income households that are holding back on spending in some fashion. With this demographic cohort accounting for nearly six in 10 dollars spent in restaurants, this leaves room for additional sales growth in the months ahead, if consumers become more confident in their financial situation.