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National Restaurant Association - Economist's Notebook: Restaurant sales growth will continue throughout 2013

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Economist's Notebook: Restaurant sales growth will continue throughout 2013

In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down recent sales trends and offers projections for the second half of the year.  Restaurant sales bounced back from a mid-year soft patch to post a healthy gain in July.  Looking forward, the expectation of continued job growth will lead to higher restaurant sales through the end of 2013.

Restaurant sales bounced back in July from a recent soft patch, according to preliminary figures from the U.S. Census Bureau.  Eating and drinking place sales totaled $45.8 billion in July on a seasonally-adjusted basis, up 0.6 percent from June and the strongest level since April’s record-high sales volume of $46.1 billion. 

The July sales performance was an improvement over May and June, when total industry sales posted back-to-back declines of 0.7 percent and 0.5 percent, respectively.  The downticks in May and June were likely due in large part to the strong growth in auto and gasoline sales, which likely crowded out some spending in restaurants. 

Auto sales fell 1.1 percent in July, giving back a portion of the robust 1.9 percent and 3.3 percent gains registered in May and June, respectively.  However, countering the July drop in auto sales was a 0.9 percent increase in spending at gas stations, which represented the third consecutive monthly gain and strongest bump in five months.  Spending trends in these areas are important to watch, as they will have a significant impact on how consumers allocate their income in the months ahead.

Despite the recent downticks, restaurant sales in July remained 3.9 percent above their July 2012 levels, after adjusting for seasonal and holiday factors.  Grocery store sales rose 2.7 percent during the same 12-month period, while overall retail sales were up a stronger 5.4 percent.

Looking forward, the key driver in the second half of the year will be job growth, as steady income gains are needed to help consumers release some of their pent-up demand for restaurants.  If monthly employment gains are in the 180,000 - 200,000 range through the remainder of the year as expected, restaurant sales will likely post consistent gains. 

Overall, restaurant sales growth in the 4 percent annualized range is the most likely scenario when the books are closed on 2013. 

Read more from the Economist’s Notebook and get additional analysis of restaurant industry trends on Restaurant TrendMapper (subscription required).

Total Eating and Drinking Place Sales
Seasonally-adjusted monthly sales volume (billions)

   Source: U.S. Census Bureau

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