In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy analyzes the latest sales results. Restaurant sales dipped in May from April’s record high volume, but still remain above year-ago levels. Looking ahead, economic fundamentals continue to point toward a generally positive sales environment in the second half of the year.
Restaurant sales edged down in May from April’s record high volume, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $45.9 billion in May on a seasonally-adjusted basis, down 0.4 percent from April’s upwardly-revised sales volume of $46.1 billion, which represented a record high.
Despite the May downtick, combined restaurant sales in April and May were nearly $1.4 billion more than the volume registered during the first two months of 2013, when restaurant spending was dampened by the payroll tax hike.
The restaurant industry underperformed in May relative the overall retail sector (excluding foodservice), where sales rose a solid 0.7 percent above its April level. However, restaurant sales in May stood 4.4 percent above their May 2012 level, which was essentially on par with the 4.3 percent 12-month gain in overall retail sales.
Looking forward, economic fundamentals continue to point toward a generally positive sales environment in the second half of the year. Job growth – a key driver of restaurant sales – continues to follow a moderately upward trajectory, with monthly gains averaging 175,000 jobs during the past year.
At the same time, consumer sentiment appears to be on the mend, with The Conference Board’s Consumer Confidence Index rising in May to its highest level in more than five years.
For their part, restaurant operators are generally optimistic that sales levels will improve in the coming months. In the National Restaurant Association’s May 2013 Restaurant Industry Tracking Survey, 41 percent of operators said they expect to have higher sales in six months (compared to the same period in the previous year), while just 10 percent expect their sales to decline.
The 10 percent of operators who think their sales will decline is the lowest reading in 11 months, which suggests that some of the downside risk to the outlook is dissipating.
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Total Eating and Drinking Place Sales
Seasonally-adjusted monthly sales volume (billions)
Source: U.S. Census Bureau