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Another Ominous Economic Sign: Americans Cutting Back on Eating Out

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Mainstream media pundits and government officials continue to talk about a growing US economy, but signs in America’s heartland point in the opposite direction.

Peter Schiff has made the case that the stagnating economy is driving this strange election cycle, and helps explain the rise to prominence of Donald Trump and Bernie Sanders.

But the election isn’t the only sign everyday Americans sense problems in the economy. Their behavior also reveals concern.

eatiog out

According to a MSN Money report, Americans have drastically reduced eating out. Growth in the fast food sector has come to a screeching halt:

Visits to fast-food restaurants had been growing at a quarterly clip of 2% since September 2015, but haven’t grown at all in March, April or May, according to as-yet-unpublished data from market research firm NPD Group Inc. When fast-food growth comes to a halt, ‘that’s a red flag because it’s been an area of growth and it’s 80% of the industry,’ NPD restaurant analyst Bonnie Riggs said.”

Fast-casual restaurants have long been the bright spot in the restaurant industry, but even that sector feels the squeeze. Visits to fast-casual dining establishments fell last month for the first time since 2004, the year NDP began tracking that segment:

The historically booming sector declined 1% in May even with beleaguered burrito chain Chipotle Mexican Grill Inc. stripped out.”

Sonic Corp. CEO Clifford Hudson told investors last week that consumers have become “more guarded” and more sensitive to prices than just a few months ago. As MSN Money put it, the state of the restaurant industry serves as a kind of canary in the coal mine when it comes to the larger economy:

Restaurants are among the first industries to benefit when consumers are feeling flush, but recent economic indicators may be giving people pause about dining out. Job growth slowed last month, and gas prices are starting to climb again.”

Diana Martin recently retired from her job as a pharmaceutical sales executive in Marietta, Ga. She told MSN Money she used to dine out several times a week, but she’s cut back due to her concerns about the economy. She’s now only eating out twice a month – at most.

Skyrocketing student loan debt is also putting the squeeze on Americans. Download SchiffGold’s Free White Paper on The Student Loan Bubble

Tracy Schwartz is one of the millions of Americans forced into taking a part-time job. She was laid off from her full-time job earlier this year and currently works part-time as a receptionist. She said she can’t afford to eat out and has been buying more prepared meals from supermarkets and clipping coupons since she got laid off. “I needed to figure out ways to save money,” she said.

This is yet another indicator that the US may well be heading toward recession, if it hasn’t entered one already.

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4 thoughts on “Another Ominous Economic Sign: Americans Cutting Back on Eating Out

  1. Slavik says:

    I always tell people to eat at home. If you want to eat well in a restaurant these days you have to pay up to 60 a person. Otherwise the ingredients aren’t good below the 60 price point, at least this is my experience. If you look hard, you may find a deal, but largely owners are cutting back on food quality and quality of service.

  2. Slavik says:

    This has been the experience in California and Texas.

  3. Larry Rojas says:

    “Blue Apron, Hello Fresh, Plated it”, all offer quality meals, at about 10 bucks a person per meal. It’s nutritional, fun to prepare and cook, and it’s like eating out… It’s a healthy alternative to fast food and more economical than eating out..

  4. Jake says:

    I keep an eye on farmers and auto sales. Grain farmers are hurting and will be for a couple more years for sure. Auto sales are flat at best. Even Ford is now going to start making the Ranger truck again as no one much wants the giant F150. Farming and auto sales always tank just before a recession. If the treasury curve turns negative soon it’s all down hill for the economy.

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