Amid slow-growing sales across most segments of retail, consumers are spending significantly more money to eat out than they have in the past, according to data released today from tracking firm Technomic.
Results confirm what specialty retailers and analysts have noted about recent quarterly reports: consumers are ramping up their spending on food and experiences more rapidly than they are their outlays for apparel.
The firm’s data on same-store sales at restaurants showed a 4 percent gain in the first quarter, which compares to a 0.8 percent increase in the same period last year. The analysts noted that midscale restaurants posted a 5.8 percent increase in comparable-store sales while “fast-casual” eateries showing a 5.3 percent rise.
Darren Tristano, executive vice president at Technomic, said in a statement that economic indicators “continue to improve with unemployment rates now below pre-recession levels. With lower gas prices, improvement in the economy has increased disposable personal income levels for many American consumers in the lower- and middle-income groups. This has granted many Americans the discretionary income to increase their visits to family-style restaurants.”
Tristano said as a result, “the full-service family-dining segment in the industry bounced back in the recent year providing better-than-expected sales growth and improvement.”
For most retailers, improving economic conditions have been slow to invigorate sales. Earlier this month, the Thomson Reuters Same Store Sales Index showed a 0.8 percent increase for May, which compared to a 5.8 percent gain in the same month last year. A few specialty apparel retailers, however, beat expectations.
Apparel retailers in particular are still facing some headwinds, but overall market conditions are improving and analysts expect better sales in the second half. Inventories jumped this spring — primarily due to the impact of the West Coast ports shutdown along with slowed spending on apparel over the winter months. The outlook is getting brighter, though.
In a “store visit” report from Telsey Advisory Group, the analysts this past weekend offered traffic patterns that “appear to be quite steady for the most part.”
“We believe those retailers that were impacted by product delays from West Coast ports are still seeing elevated inventory levels and thus, greater promotional activity to help clear through the excess,” the analysts stated.