Restaurant sales continued to rise in July, but at a much slower pace

Consumer spending in restaurants rose for the third consecutive month in July, albeit at a much slower pace than the previous two months. Eating and drinking places* posted sales of $52.5 billion on a seasonally-adjusted basis in July, according to preliminary data from the U.S. Census Bureau.

Restaurant sales in July were up 5.0 percent from the previous month, which was substantially lower than the stronger gains registered in May (31.3%) and June (26.7%). July’s slowdown in sales growth was not surprising, as reopening plans were paused or rolled back in some parts of the country during the month.

To be sure, consumer spending in restaurants continues to trend in a positive direction, despite all of the uncertainty surrounding the virus and the economy. However, July’s sales volume was still about $13 billion lower than the pre-coronavirus levels registered in January and February.

After the initial bounce in May and June, July’s sales results are a reminder that the restaurant industry’s road to recovery will be long and uneven. 

While the seasonally-adjusted figures offer a directional look at spending trends from month to month, they don’t provide a complete picture of the sales losses that have been experienced by restaurants during the coronavirus pandemic. For this, the Census Bureau’s unadjusted data set is a better measure, because it represents the actual dollars coming in the door. 

In total between March and July, eating and drinking place sales levels were down more than $131 billion from expected levels, based on the unadjusted data. Add in the sharp reduction in spending at non-restaurant foodservice operations in the lodging, arts/entertainment/recreation, education, healthcare and retail sectors, and the total shortfall in restaurant and foodservice sales likely topped $165 billion during the last five months.  

*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.