Monday, March 19, 2012

New Restaurant Index Suggests Improving Economy

From Floyd Norris in the NY Times last Friday:

"Have you been eating more at restaurants with waiters rather than fast-food joints? If so, you are not alone, and that in fact is an indication that the American economy is improving.

Over the 12 months through January, sales at what the government calls full-service restaurants were 8.7 percent higher than in the previous 12 months. That was the fastest pace of growth since the late 1990s, when the economy was booming. Moreover, as is seen in the chart above, that rate was much greater than the rate of growth in sales at limited-service restaurants. 

Since those numbers became available 20 years ago, that difference has been a reliable indicator of how the economy is going. In tough times, people may still eat out, but they cut back."

Related: The National Restaurant Association's "Restaurant Performance Indexes" also point to strength in national restaurant activity, and that growth is expected to continue according to the association's "Expectations Index," which measure restaurant owners' six-month outlook for the industry.   


10 Comments:

At 3/19/2012 9:09 AM, Blogger Jon Murphy said...

It's also good to note that the sales in the period mentioned in the article were at a record high

 
At 3/19/2012 9:18 AM, Blogger morganovich said...

i wonder to what extent this is a result of relative inflation rates.

food at home has been going up in price at nearly twice the level of food away from home according to CPI.

might this be a reflection of the increased relative attractiveness of restaurant food?

also: are they using an overall sales number here or same store sales? the NYT article is not clear on that.

 
At 3/19/2012 9:27 AM, Blogger Jon Murphy said...

also: are they using an overall sales number here or same store sales? the NYT article is not clear on that.

The numbers I am looking at (which reflect the article) say that retail sales for full-service establishments for the 12 months ending in January totaled a record $220.4 billion.

 
At 3/19/2012 9:36 AM, Blogger morganovich said...

jon:

thanks.

what were they a year ago?

 
At 3/19/2012 9:50 AM, Blogger Jon Murphy said...

Retail sales for the same 12 month period last year were $202.7 billion

 
At 3/19/2012 10:02 AM, Blogger morganovich said...

thanks jon.

that's a pretty good jump. does the data get any more granular on prices and seat count?

if there is price data, would love to compare it to the CPI food away from home numbers.

 
At 3/19/2012 10:32 AM, Blogger Jon Murphy said...

that's a pretty good jump. does the data get any more granular on prices and seat count?

I don't have that data on hand, but it's probably available somewhere

 
At 3/19/2012 11:03 AM, Blogger Matt said...

I'm hearing from some of my CRE brokers (I do research in the field) that there are also folks who are out of work that are using what savings they have left to open restaurants - i.e. I can't find a job, so I'll hire myself.

They don't, unfortunately, have the deep pockets or expertise they need to keep the fledgling business alive, and are soon closing down and vacating, often leaving their equipment behind. Could account for some of those new restaurants that are showing up on the radar.

 
At 3/19/2012 12:23 PM, Blogger bart said...

http://www.nowandfutures.com/images/restaurant_index.png

 
At 3/20/2012 4:49 AM, Blogger Sasha Naryshkine said...

Hi Prof Perry
If you take the McDonald's same store sales for the US in the month of Feb versus expectations, the number was huge, 11 percent plus. Is this just not the same theme across the sector, bottom end to top end?

And perhaps another question which you could answer for me via a blog, perhaps it has something to do with recency bias, why are there not so many believers in the recovery now, and is it different to any other beginning of economic recoveries.

 

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