Monthly sales at restaurants exceeded grocery store receipts in the United States sales for the first time on record last December, according to data from the US Census Bureau released on May 13. Bruce Grindy, chief economist of the Washington, DC-headquartered National Restaurant Association (NRA), broke down industry sales trends as follows:
The gap between monthly grocery store sales and restaurant sales started gradually shrinking in 2010 – a trend that was partially due to the increase in consumers buying groceries at big box stores.
There has been a dramatic shift toward restaurants that occurred in the last 10 months. In June of 2014, grocery store sales exceeded restaurant revenues by $1.6 billion. By April of 2015, the gap had essentially reversed, with restaurant sales moving out in front by $1.5 billion.
In fact, the $3.1 billion sales shift registered during the last 10 months is nearly as much as occurred during the previous 4.5 years.
Boost from Lower Gas Prices
The reallocation of consumers’ food dollars toward restaurants coincided with the sharp decline in gas prices in recent months, which suggests that the savings at the pump may have helped accelerate this change in consumer behavior.
To investigate the impact of lower gas prices, the NRA commissioned ORC International to conduct a national telephone survey of 1,008 adults between April 30 and May 3.
Not surprisingly, 80% of car owners said the recent fall in gas prices positively impacted their household finances. This sentiment was generally consistent across all income levels, with people in lower-income households the most likely to say that lower gas prices had a “very significant” positive impact on their finances.
Restaurants Likely Benefitting
Among car owners who said the decline in gas prices positively impacted their household finances, 49% say the lower fuel costs have increased their willingness and ability to do things like purchase meals, snacks or beverages from restaurants, fast food outlets or coffee shops.
People in lower-income households are even more likely to feel that way, with a majority of car owners in households with income below $50,000 saying the positive impact that reduced gas prices are having on their finances has increased their willingness and ability to patronize restaurants, fast food places or coffee shops.
Growing Consumer Confidence
Overall, 33% of adults surveyed said they are patronizing restaurants more often now than they were one year ago. Within this group, the most common reason given was that they feel more confident in their financial situation – mentioned by 63% of consumers who are using restaurants more frequently.
Fifty-six percent of consumers said they increased frequency because gas prices are lower, while 46% said it’s because their household income went up. Three in 10 consumers reported they are visiting restaurants more often because they got a new job or because their home or investments are worth more.
Pent-Up Demand Still Elevated
With gas prices likely contributing to the dramatic shift in consumer spending during the last several months, the question is: Will these spending patterns hold when gas prices increase again?
To be sure, there appears to be even more room for growth in the months ahead. When asked about their current restaurant usage, a significant proportion of the American public said they would like to be patronizing restaurants more often. Thirty-eight percent of all adults said they are not eating on the premises of restaurants as frequently as they would like, while 37% said they are not purchasing takeout or home-delivered food as often as they would like.
Putting these results in a historical context, this measure of pent-up demand remains well above pre-recession levels. On a consistent basis during the stronger restaurant business environment of the mid-2000s, typically only one-quarter of adults said they were not patronizing restaurants as frequently as they would like.
