Restaurant sales registered a solid gain in July, as consumers ramped up spending across several discretionary sectors. Looking forward, a number of factors are providing tailwinds for additional consumer spending growth, including an improving job market, rising income, and the continued benefit of 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 remained on a positive trajectory in July, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $52.3 billion on a seasonally-adjusted basis in July, which represented a solid 0.7 percent increase over June’s sales volume of $51.9 billion.
In addition to July’s strong sales performance, the preliminary May and June readings were revised significantly higher by the Census Bureau, which turned an originally-reported June decline into a solid 0.5 percent increase. As a result, July marked the 17th sales gain in the last 18 months, with the only blemish in the trend being a modest 0.1 percent downtick in January.
Overall, total retail sales rose 0.6 percent in July, after remaining essentially unchanged in June. In addition to restaurants, other industries that drove the July sales gain were non-store retailers (+1.5 percent), auto dealers (+1.4 percent), sporting goods and hobby stores (+0.9 percent), furniture stores (+0.8 percent) and building supply stores (+0.7 percent).
Grocery store sales were essentially unchanged in July, after dipping 0.1 percent in June.
Looking forward, the outlook for restaurant sales remains generally positive for the rest of the year. A number of factors are providing tailwinds for additional consumer spending growth, including an improving job market, rising income, and the continued benefit of dampened gas prices (in most regions of the country).
For their part, restaurant operators remain reasonably optimistic about business conditions, though they aren’t quite as bullish as they were a few months ago. According to the NRA’s July 2015 tracking survey, 42 percent of restaurant operators said they expect to have higher sales in six months, while only 8 percent expect their sales to decline in six months (both compared to the same period in the previous year). However, in both the March and April tracking surveys, a much stronger 59 percent of operators said they expected sales to improve in the next six months.