Flat, unchanging, cooling, and somewhat stable currently define the restaurant industry, depending on where you look. The good news is that consumers still love us and want to continue dining at their favorite restaurants. The bad news is the gradual slowdown in the overall economy has left their confidence shaken and reduced their spending habits.
And what about the labor market and job openings? That’s also showing some significant cooling. According to research conducted by the National Restaurant Association, restaurant sales have been relatively flat, and job openings and the labor market are relatively cool.
Here, we’ll explore some of the current restaurant economic trends as the leaves begin to change and the hot days of summer become the crisp days of fall.
Restaurant Sales
Eating and drinking places saw total sales of $94.5 billion (seasonally adjusted) in August. This figure has been essentially the same over the last four months. The sales in August were about 2.7% above year-over-year levels, representing the smallest increase since the industry began its pandemic recovery.
While sales were flat, menu prices have continued to increase, though at a much slower rate, coming in at 4% in May and June and 3% in August. Because of this increase, real restaurant sales actually declined by a little over 1%.
Restaurants Still in Demand
A September survey by the National Restaurant Association found that 42% of adults are not going out to restaurants as much as they would like to. This figure has been fairly steady over the last two years. Additionally, 38% say they’re also not ordering delivery or takeout as much as they want, showing a slight increase compared to their previous surveys.
This desire to go out more often than able is most commonly seen among households with an income below $50,000. That drops significantly in households with incomes of $100,000 or higher, a segment of the population that’s responsible for almost 6 in 10 dollars spent in restaurants.
Depending on your concept, these figures offer clues to your marketing strategy.
The Job Market
So, how does the labor market feel out there? Are restaurants getting some relief? According to the data, that answer is a definite yes. According to where I currently reside, that answer would be a definite no. In fact, today, as I write this, there is a sign on the door that reads, “Sorry! We are unable to open the restaurant today or tomorrow due to labor shortages.”
According to the Bureau of Labor Statistics, there were 795,000 accommodation and foodservices job openings in July, compared to 816,000 in June. Today, job openings are lower than the pre-pandemic era of 2017 – 2019. However, we have been hiring, with 626,000 workers hired in June and 782,000 in July.
When viewing the economy at large, in July, for every 100 openings, there were over 93 unemployed workers. That amounts to 7,673,000 job openings and 7,163,000 unemployed individuals. This is a significant change from December 2022, when there were 4.7 million more job openings than people looking.
Though there was a slight increase in the number of people quitting our sector, that number has been steadily declining and is currently well below pre-pandemic levels.
The Federal Reserve’s inflation measure, the personal consumption expenditures deflator, rose 2.5% since July 2023, the lowest since February 2021. These measures suggest their meeting on the 18th will see the long-awaited cut on short-term interest rates.
The Business Trends and Outlook Survey by the U.S. Census Bureau revealed that over 51% of restaurant operators believe their business performance is average. A little less than 31% believe conditions are below average or poor.
The Future
Some of our challenges this summer include a rise in COVID-19 cases and unusually hot weather in some parts of the U.S. September and October, however, are pivotal times in the industry, giving operators a chance to prepare for the all-important Q4. What do the experts recommend as fall moves forward? Cautious optimism is the keyword for the restaurant industry in 2024.
