Restaurant sales continued to trend higher in July, even as consumers pulled back on spending in other areas. Eating and drinking places* registered total sales of $72.2 billion on a seasonally-adjusted basis in July, according to preliminary data from the U.S. Census Bureau.

That was up 1.7% from June’s sales volume of $71 billion, and represented the sixth strong increase in the last seven months. As a result, eating and drinking place sales in July stood $6 billion – or 9.1% – above the February 2020 pre-pandemic sales volume of $66.2 billion. 

Restaurants were one of the few bright spots among the major categories tracked in the Census Bureau’s July sales report. Elsewhere, sales declined at motor vehicle dealers (-3.9%), non-store retailers (-3.1%), clothing and accessory stores (-2.6%), sporting goods and hobby stores (-1.9%) and building material and supply stores (-1.2%).

The third consecutive monthly decline in auto sales was driven more by a lack of supply rather than a pullback in consumer demand, so it remains to be seen if spending patterns will be impacted once inventories are replenished on dealership lots. If consumer demand for autos remains strong – particularly at elevated prices – it has the potential to crowd out spending in discretionary categories like restaurants.

Despite the looming potential for additional competition in the coming months, restaurant sales will likely continue to be supported by healthy household balance sheets and consumers’ elevated pent-up demand for socialization and experiences.

*Eating and drinking places are the primary component of the U.S. restaurant and foodservice industry, which prior to the coronavirus outbreak generated approximately 75 percent of total restaurant and foodservice sales.

Read more analysis and commentary from the Association's chief economist Bruce Grindy.