Good Economic News Boosts Restaurants Beer and Wine

Looking for good news? Two recent economic analyses of the restaurant and beverage business indicates the recent summer bump may augur good things to come.

First, in restaurants, total eating and drinking place sales totaled $47.3 billion in July, said to be the strongest monthly volume on record. Steady job growth and improving consumer confidence points toward continued sales gains in the months ahead, according to the National Restaurant Association's chief economist Bruce Grindy.

Restaurant and Beverage economic trends

Restaurant sales continued the recent upward trend, according to preliminary figures from the U.S. Census Bureau. Eating and drinking place sales totaled $47.3 billion on a seasonally-adjusted basis in July, up 0.2 percent from June and the strongest monthly volume on record. July's uptick marked the fifth gain in the last six months, as consumer spending on food away from home rebounded from the weather-related softness that started the year.

Overall, eating and drinking place sales were up 6.2 percent in the 12 months ending July 2014, which surpassed the 3.7 percent gain in overall retail sales during same period. Restaurant sales growth was also well above the 2.4 percent gain in grocery store sales over the last 12 months.

The NRA said business conditions should continue their positive trajectory for the next few months at least. The economy added over 200,000 jobs in each of the last six months (for the first time since 1997), while the Consumer Confidence Index rose to its highest level in nearly seven years.

Restaurant operators are generally optimistic that business will improve in the coming months, said the NRA. According to their July 2014 Tracking Survey, 44 percent of restaurant operators said they expect to have higher sales in six months (compared to the same period in the previous year), while only 10 percent of restaurant operators expect their sales to decline in six months.

Meanwhile, overall beer sales have accelerated; according to Nielsen, for the four weeks ended 8/2/14, overall beer industry sales grew 3.4 percent, an acceleration from the 0.8 percent growth in the prior period. Industry volumes increased 0.8 percent, the strongest showing in four months. Wine sales accelerated to +4.2 percent, driven by 1.4 percent volume growth and 2.7 percent price increases.

While Nielsen data is retail-based, the strengthening of both restaurant business and retail beer and wine sales are good news for all operators. Combined with recent craft beer growth, operations relying on incremental beer and wine sales have reason to be optimistic.


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