Restaurant spending decline first in 60 years
July 21, 2010
by Jay Sjerven
Total consumer expenditures at restaurants in 2009 declined 2.2% from the year before, the first yearto-year decline since 1949, according to data published in June by the Economic Research Service of the U.S. Department of Agriculture.
Expenditures at “eating and drinking places” totaled $411,777 million, down from a record $421,175 million in 2008. The 2.2% decline compared with increases of 2.9% in 2008 and 5.6% in 2007. In the four years before 2007, annual restaurant expenditures climbed between 6.1% and 7% each year.
The decline of 2.2% was the first decline of any amount since restaurant sales fell 0.7% in 1949 and the largest drop since a 4.1% downturn in 1938, at the height of the Great Depression.
The data showing a downturn were consistent with trends highlighted by other industry observers. The National Restaurant Association, which tracks industry performance through its Restaurant Performance Index (R.P.I.), has seen the index fall and stay below 100 for approximately two years. The R.P.I. is based on the responses to the N.R.A.’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures. In March, the R.P.I. rose above 100 for the first time in two years.
In addition to eating and drinking places, a number of other categories are included in total food away-from-home expenditures, but most of these experienced increases in 2009.
For instance, spending at schools and colleges in 2009 was $34,209 million, up 3.2% from 2008.
At recreational places, a category that covers a range of venues, including sports arenas, bowling alleys, amusement parks and clubs at golf courses, food spending in 2009 was $20,025 million, up 2%.
Up sharply in 2009 was spending at retail stores, direct selling, at $30,816 million, up 29% from $23,803 million the year before. The category includes restaurant kiosk sales at food retailers.
Queried about the jump, Annette Clauson, an E.R.S. agricultural economist, said rapid growth from certain channels drove the growth.
“There were specific store increases that led to the 2009 change,” she said. “The stores that increased the most in this category were the food stores attached to gas stations; warehouse/wholesale clubs, and drug stores. These stores are in this category if food is less than 50% of their sales. I have read in several food marketing releases that stores such as Target are replacing their garden shop with food. Also, food sales increased in 2009 for all of the food stores/quick marts attached to gas stations.”
Food expenditures at hotels and motels in 2009 were $30,077 million, down 0.3% from the year before. It was the second consecutive year of a 0.3% decline. Before 2008, food expenditures at hotels and motels had been up every year since 1991. Before that, 1954 was the last year in which hotel/motel food spending declined.
Overall, total away-from-home food expenditures in 2009 were $574,541 million, down 0.1% from 2008.
Eating and drinking places represented the largest segment of the away-from-home food expenditures category, accounting for 71.7% of all such expenditures. The share is down from 73.2% in 2008 and 73% in 2007. The figure has held within a tight range since the mid-1990s.
From the 1930s until the mid-1990s, the “other” category for away-from-home food expenditures was in a steady decline, from 43.7% in 1945 to 9.3% in 1995. Included in the other category are military exchanges and clubs, railroad dining cars, airlines, food service in manufacturing plants, institutions, hospitals, boarding houses, fraternities and sororities, and civic and social organizations; and food supplied to military forces, civilian employees and child day care centers.