Money & Business

Report: Restaurants Top Grocery Stores for First Time

By / May 18, 2015 (iStock/Thinkstock)

The National Restaurant Association credits low gas prices for the dramatic shift in consumers frequenting restaurants over grocery stores, according to a U.S. Census Bureau report. While not every report makes the same case, it nonetheless emphasizes the restaurant industry’s fast growth.

Editor’s note: This story has been updated and clarified with additional data from the Food Institute.

When gas prices go down, consumers get to indulge in luxuries afforded by full tanks and unlimited travel. Case in point: Data from the U.S. Census Bureau show that for the first time, monthly sales at restaurants exceeded grocery store sales this past December. The National Restaurant Association says decreased pain at the pump has made this spike in dining out possible for many American consumers.

“The reallocation of consumers’ food dollar 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,” according to a report by the National Restaurant Association.

The last 10 months are especially noteworthy in terms of the trend toward patronizing restaurants. While grocery store sales exceeded restaurant sales by $1.6 billion in June 2014, by April 2015, restaurant sales had pushed ahead by $1.5 billion. That $3.1 billion sales shift is nearly equal to what occurred during the previous four and a half years.

One factor that skews this number, however—as pointed out by Wall Street Journal columnist Jo Craven McGinty [subscription]—is that the Census Bureau statistics leave out big-box stores that sell groceries, such as Wal-Mart, Costco, and Target. McGinty highlights research by the Food Institute that encompassed more sectors of the grocery industry. The Food Institute’s numbers still showed food purchases at all food retailers coming out far ahead of restaurants.

However, one thing can’t be missed from either report, as McGinty notes: The restaurant industry is nonetheless seeing significant growth.

“For April, eating and drinking places sales are up 9.5 percent from a year ago,” Food Institute President Brian Todd told McGinty. “Especially now that the recession has ended for the most part, consumers are looking to splurge a little bit.”

Everyone Benefits

Lower gas prices mean that consumers can splurge with less guilt. The Census Bureau report indicates that among car owners who attribute the decline in gas prices to improved household finances, 49 percent say that cheaper fuel has made them more willing and able to patronize establishments like restaurants, fast-food places, and coffee shops.

Lower-income consumers are even more inclined to agree with this sentiment, with a majority of car owners in households with incomes less than $50,000 believing that reduced gas prices have allowed the opportunity to dine out.

A Solid Trend

Gas prices may rise and fall, but consumers seem poised to continue treating themselves to meals outside the home. The tendency to dine out already goes against the odds, considering that restaurant visits are becoming popular during a time in which many consumers are forgoing the nonessentials.

“Putting these results in a historical context, this measure of pent-up demand remains well above pre-recession levels,” the report states.

And there’s still room for the industry to grow as well. According to the report, 38 percent of all adults surveyed aren’t eating at restaurants as much as they would like, while 37 percent aren’t purchasing as much takeout or delivery as they would prefer.

Julia Haskins

Julia Haskins is a contributor to Associations Now. More »

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