The National Restaurant Association's Chief Economist Bruce Grindy breaks down the latest retail sales figures. Restaurant sales totaled $46.5 billion in May, which was down slightly from the record volume posted in March. Despite the recent softness, improving economic conditions point toward a positive second half of 2014.
After posting a record high volume in March, restaurant sales backed off during the last two months, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $46.5 billion on a seasonally-adjusted basis in May, down roughly $200 million from the recent peak registered in March.
Despite the downticks of the last two months, restaurant sales remain on a positive trajectory overall. In the 12 months ending May 2014, eating and drinking place sales were up 4.1 percent, after adjusting for seasonal, holiday and trading-day factors. This growth was generally in line with the 4.3 percent gain in overall retail sales during the same period, and well above the modest 1.3 percent increase in grocery store sales.
The recent softness in restaurant sales may have been due in part to a sharp increase in auto sales. Sales at auto dealers were up a strong 1.4 percent in May, and stood more than 10 percent above their year-ago levels.
Looking forward, restaurant operators remain generally optimistic that their sales environment will improve in the months ahead. In the NRA’s May 2014 Tracking Survey, 46 percent of restaurant operators said they expect to have higher sales in six months (compared to the same period in the previous year), while only 11 percent of restaurant operators expect their sales to decline in six months.
On the macro level, expect business conditions for restaurants to continue improving in the second half of 2014, as steady job growth will boost income and consumers’ confidence in their financial situation. This will set the stage for households to burn off more of their accumulated pent-up demand for restaurants.
Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on Restaurant TrendMapper (subscription required).