Restaurant sales hit a record high in October, as consumers’ pocketbooks continue to get relief from falling gas prices. The underlying fundamentals of lower gas prices, steady job growth and rising consumer confidence point toward an improving business environment for restaurants 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.
Buoyed by the continued decline in gas prices, restaurant sales rose to a record high in October. According to preliminary figures from the U.S. Census Bureau, eating and drinking place sales totaled $48.6 billion on a seasonally-adjusted basis in October, which represented an increase of more than $400 million over September’s sales volume.
The October gain marked the eighth increase in the last nine months, after hitting a weather-related soft patch at the beginning of the year. As a result, eating and drinking place sales stood 6.8 percent above their year-ago levels, which is a full three percentage-points above the 3.8 percent gain in total retail sales (excluding foodservice) during the same 12-month period.
In recent months, restaurant sales gains were boosted by a steady decline in gas prices, which were down $0.76 since the end of June. Some of these savings were clearly directed toward restaurants, as October’s seasonally-adjusted sales total of $48.6 billion was $1.3 billion above June’s volume.
Although consumers remain cautious, the underlying fundamentals suggest that sales will continue to rise in the coming months. In addition to gas prices lingering at a four-year low, the economy continues to add jobs at a 200,000+ monthly clip and consumer confidence is at a seven-year high. All of these add up to an improving business environment for restaurants.