The industry’s first quarter is going out on a high note that’s expected to last throughout 2016.
2016 is shaping up to be a strong year for the restaurant industry. According to the National Restaurant Association, more people are dining out. U.S. Census Bureau figures show that Americans spent $53.7 billion on eating and drinking in February compared to $53.2 billion in January.
One reason for the increase is the fact that margins on restaurant sales are higher. The Bureau of Labor Statistics (BLS) reports that in the quick-service segment, menu prices increased by 2.6 percent between February 2015 and February 2016. Restaurants are also spending less money on food. The BLS says that wholesale food prices dropped 0.3 percent in February, and are down a total of 2.3 percent since February of last year.
Another factor playing a role in the restaurant industry’s successful first quarter is the economy. People are going out to eat because they’re making more money than they have been for the past few years. In February, real disposable income increased by 0.3 percent for the third consecutive month. That’s because there is a stronger job market and fuel prices are down, freeing up money for consumers to spend on meals.
Millennials are the driving force behind the restaurant industry’s sales increases—a survey conducted by Visa Business and Economics Insight in January found that 22 percent of millennials are dining out more frequently this year than they were in 2015. That trend is expected to stick around for the rest of the year, setting the industry up for a profitable 2016.
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