Student loan repayments are apparently having little discernable impact on restaurant sales, at least according to the latest federal retail sales data.
Restaurant and bar sales rose 0.9% in September from August, part of some surprisingly resilient retail sales last month according to new data from the U.S. Census.
On an annual basis, restaurant sales are up 9.2%, a rate higher than the overall rate of inflation. Over the past four years, despite a global pandemic, widespread closures of dine-in service, an overall reduction in restaurants and generationally high inflation, industry sales are up 39%.
Overall, retail sales rose 0.7% in September and 3.9% over the past year.
Spending at grocery stores rose 0.4%, less than half the rate of growth at restaurants. Some of that is due to price increases, as restaurants and bars have been raising prices more aggressively than grocers in recent months. But the “gap” in pricing between the two providers of food to consumers doesn’t appear to be doing much to discourage restaurant spending.
Two likely reasons: Consumers have jobs, and they prefer spending on experiences.
Employment has continued to remain strong, with the unemployment rate effectively at full employment at 3.8%. When people have jobs, they have money to spend at restaurants and less time to prepare food at home.
Perhaps more important: They would rather eat out than spend on other things. Consumers appear to be shifting their spending, but are not spending less overall, preferring experiences over goods.
They’ve spent less on clothing last month (down 0.8%), building supplies (down 0.2%) and electronics (down 0.8%).
All this had a positive impact on stocks. Most restaurant stocks rose on Tuesday.
The retail sales data has come despite various concerns that the consumer could cut back on spending. Consumers have run out of pandemic savings. They are now having to pay back student loans. And they’ve put more money on credit cards. Yet the spending has continued.
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