The restaurant industry wrapped up 2014 on a positive note, as both sales and employment registered solid gains in December. While challenges remain, the restaurant industry enters 2015 with a generally positive business environment, due in large part to the tailwinds of an improving labor market and dampened gas prices, 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 higher in December, as consumers took their savings at the pump and reallocated spending toward restaurants. According to preliminary figures from the U.S. Census Bureau, eating-and-drinking-place sales totaled $49.6 billion on a seasonally-adjusted basis in December, the eighth consecutive monthly increase and strongest volume on record.
In contrast, overall retail sales (excluding foodservice) fell 1.1 percent in December, due in large part to a 6.5 percent plunge in spending at gas stations.
The recent run of strong restaurant sales gains coincided with the sharp decline in gas prices, which fell more than $1.40 during the last six months of 2014. December’s restaurant sales volume of $49.6 billion was more than $2.3 billion above June’s seasonally-adjusted volume, an increase of 5 percent.
On the jobs front, the restaurant industry continued to expand payrolls at a strong pace in December, according to preliminary figures from the Bureau of Labor Statistics. Eating and drinking places added a net 43,600 jobs in December on a seasonally-adjusted basis, their 58th consecutive monthly increase and strongest gain in two years.
In total for 2014, restaurants added jobs at a solid 3.1 percent rate, more than a full percentage point above the 1.9 percent gain in total U.S. employment. It also represented the 15th consecutive year in which restaurant job growth outpaced the overall economy.
The 2014 gain marked the third consecutive year in which eating and drinking place job growth topped 3 percent, the first such occurrence since the 1993 to 1995 period. Meanwhile, the overall economy hasn’t posted job growth of 3 percent since 1994.
While challenges remain – most notably elevated food costs – the restaurant industry enters 2015 with a generally positive business environment. The tailwinds of an improving labor market and dampened gas prices should continue to reinvigorate consumers and help them break out of their recession mindset. To be sure, if the economic fundamentals continue to improve, 2015 has the potential to be a breakout year for consumers.