While the government’s report on retail sales isn’t expected to be released until Wednesday, economists have been examining a recent trend regarding restaurant sales, which have been experiencing a three-year steady decline in growth rate. The pattern is traditionally associated with a weaker economy, which doesn’t explain the current trend. But economists do believe they know who is to blame.
As reported by CNBC, economists with Bank of America Merrill Lynch have attributed the decline in restaurant sales growth largely to Millennials or members of Gen Y. While restaurant shifting among all generations has shifted, the downtrend in Millennial restaurant spending is especially pronounced.
In 2015, the growth rate in spending was 9 percent but is just at 1.6 percent now.
“It stands out as a bit unusual how soft restaurant spending has been considering where we are in the business cycle,” said US economics at BofA Merrill Lynch head Michelle Meyer. “The consumer should be spending more on a broad range of items. But we’ve seen restaurants slowing more akin to a recessionary environment.”
One proposed reason for the decline, in regards to Gen Y spending in the category, is that Millennial spending patterns could be changing as they get older. However, supermarket buying trends don’t support the notion that they are favoring meals at home either.
“Grocery spending is also pretty slow,” said Meyer. However, the rise of online grocery options and meal delivery kits could play a role as it is possible the data isn’t fully captured or properly associated with the category.
Meyer also notes that the upcoming holiday season may provide additional insight, stating, “I think it will be telling to observe what they spend on.”
Restaurant sales are considered a component of the broader retail sales category, which is, according to Thomson Reuters, is expected to be relatively flat. Only 0.2 percent growth is expected to announced for October, based on the exclusion of auto sales. In comparison, September saw a 1 percent gain.
Retail sales can be impacted by a number of factors, including events like Hurricanes Harvey and Irma, regardless of the overall strength of the economy.