US consumers have contributed to a spending surge in restaurants over the last three months, according to the latest figures from the Commerce Department.
Sales at restaurants and drinking outlets increased by 1.3% in July to $61.6bn, taking the three-month annualised gain to 25.3%, which is the fastest growth pace since 1992.
According to NatWest Markets analysts Kevin Cummins and Michelle Girard, the figures indicate ‘consumers remain quite comfortable with their personal financial situation and the economic outlook.’
Omair Sharif of Societe Generale stated that eateries contributed to 30% of the July growth in retail sales, although only 12% of the total.
Sharif noted: “Any mean reversion here would lead to a noticeably slower pace of retail sales in the coming months.”
One reason could be that US consumers are spending their additional cash from tax cuts on eating out. Several major restaurant companies have increased prices in the recent past to meet higher minimum wages and rent costs.
In an interview with Bloomberg, Sharif stated the gains could be partly because of the price increases associated with a hike in labour costs.
In July this year, McDonald’s posted a gain in the key measure of same-store sales, although its customer traffic dipped in its US market, indicating that fewer consumers are dining out but are spending more.
Restaurants across the industry are attracting diners through delivery services and discounts.