Restaurant sales trended steadily higher in recent months, as consumers benefited from the sharp decline in gas prices. Looking forward, restaurant operators are increasingly optimistic about continued growth, and the underlying economic fundamentals point toward an improving business environment in the year 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.
Restaurant sales continued to trend steadily higher in November, as a stronger labor market and falling gas prices fueled the increase in consumer spending. According to preliminary figures from the U.S. Census Bureau, eating and drinking place sales totaled $49.4 billion on a seasonally-adjusted basis in November, the seventh consecutive monthly increase and strongest volume on record.
In the five months since gas prices hit their recent cyclical peak at the end of June, restaurant sales rose sharply. November’s sales volume of $49.4 billion was more than $2 billion above June’s seasonally-adjusted volume, an increase of 4.4 percent. This is nearly triple the 1.7 percent gain in total retail sales (excluding foodservice) during the same period.
For their part, restaurant operators are increasingly optimistic that business conditions will continue to improve in the coming months. In the Association’s November 2014 Restaurant Industry Tracking Survey, 52 percent of operators said they expect to see higher sales in six months, compared to previous-year levels. Only 6 percent think their sales will dip in six months. This represented the most optimistic operator outlook in nearly three years.
Restaurant operators are also more bullish about the overall economy than they have been in quite some time. Thirty-five percent of restaurant operators expect the economy to improve in the next six months, the strongest reading since June 2012. Only 8 percent of operators think economic conditions will worsen in the next six months, which is the lowest negative sentiment in nearly four years.
The road forward won’t be without speed bumps, as consumers are still relatively cautious in their spending habits. However, the underlying fundamentals of steady job growth, lower gas prices and rising consumer confidence point toward an improving business environment for restaurants in the year ahead.