Steady sales indicate industry headed in right direction

Restaurants sales have remained steady following a record high in June, industry experts say.

According to preliminary figures from the U.S. Census Bureau, eating and drinking place sales in July held at $40.9 billion after hitting that record number the month before.

"Sales through July are on pace to post their strongest growth since 2007 -- something we projected in the association's 2011 Restaurant Industry Forecast," said Hudson Riehle, senior vice president of the National Restaurant Association's Research and Knowledge Group.
Also, overall retail sales increased 0.5 percent in July on a seasonally adjusted basis, the census bureau reported, and grocery sales also trended upward, rising 0.6 percent on a seasonally adjusted basis.

For the first seven months of 2011, food and beverage sales at restaurants and bars were up 5.2 percent after adjusting for seasonal and holiday factors. For the same period, overall retail sales rose 8.4 percent and grocery store sales increased 5.7 percent.

Riehle said the positive sales trend indicates consumers are expressing pent-up demand to eat out while still carefully watching their discretionary-dollar spending. He added that an increase in tourism and vacation travel this summer also has helped bump up sales.

But while sales are on the uptick, they remain somewhat soft, particularly when compared with prerecession figures, said Bruce Grindy, the NRA's chief economist.

"Overall, it is better than it was in 2010, so we're definitely heading in the right direction," he said. "But overall growth is still under total retail [sales] out there," he said. "Right now it's good for the industry, but not great. Everything depends on what happens with the economy in the months ahead. If there is job growth and consumer confidence gets better, it will be good for the industry."

Grindy added that the "current situation is positive in that the restaurant industry is growing, but there still are segments that are facing challenges based on core customer demographics."

Riehle noted the increase in sales compared to last year spurred employment at restaurants.

"This higher sales growth has resulted in more hiring over the past year," he said. "July was the 17th consecutive month for private-sector employment growth, and even though there are millions of jobs still to be regained across the country, this addition of 2.4 million jobs has not only aided income levels, but also increased the demand to dine out."