Spending at Restaurants Tops Grocery Stores for First Time
What's for dinner tonight? You're more likely to find the answer on a restaurant menu than you are on your grocery shopping list.
New government figures show American consumers spent more at restaurants and bars in March than they did at grocery stores -- the first time that's happened since the Commerce Department began tracking in 1992.
Experts say it's a sign of confidence in the economy -- and a sign of the times. Consumers are looking for convenience, which means a lot of the industry's growth is coming from areas other than the traditional sit-down meals. Hudson Riehle, senior vice president of research at the National Restaurant Association, says takeout, drive-throughs and other quick and easy meals are driving growth for the industry. He says "consumer usage of restaurants has become an important element of their lifestyle."
Younger millennials, those 18 to 28 years old, are going out more often, and restaurants are increasingly catering to their likes and dislikes. According to the market research firm NPD Group, millennials represent 23 percent of total restaurant spending. However, that's still below their spending level in 2007, just before the Great Recession began.
At the same time, baby boomers have the means and the time to enjoy eating meals that someone else prepares for them. And NPD says many restaurant operators aren't paying enough attention to this group.
Empty Nesters Enjoy Eating Out
Carol Macknin says she and husband Alan are eating out more. " Most of it is spur of the moment. We don't have the kids to worry about any more. As a result, we don't spend as much." The couple, with four grown children, recently moved from the suburbs into downtown Philadelphia. She says both factors give them the feeling of having "a new-found freedom."
Whoever is doing the ordering, young or old, restaurants are becoming an increasingly important sector of the economy. The National Restaurant Association says industry-wide sales this year are projected to total a record high $709 billion, up nearly 4 percent from 2014. There are 1 million restaurants nationwide, accounting for 14 million jobs, representing about 10 percent of the U.S. workforce. And even though the big chains get most of the media attention, about 7 in 10 restaurants are single-unit operations, according to the association.
The cost of restaurant meals (averaging $6.96 last year) are rising faster than the cost of in-home meals ($2.24), the NPD Group says. NPD also notes that even though we are spending more of our food budget on restaurants, four out of five meals come from food bought for the home.
There is one important asterisk about the trend, as Bloomberg notes. The government figures on grocery stores don't count stores such as Walmart (WMT), Target (TGT) and Costco (COST). Instead, they are considered "general merchandise retailers," even though they account for an ever-increasing proportion of food sales.