Alliance of Americans for America

People Aren’t Going Out To Eat—U.S. Economy and Politics to Blame

Man holds sign complaining that all the money goes for food and rent.Here’s another good story and a thought to consider: If millions of Americans who can’t find a decent job don’t have any disposable income after paying their bills and making ends meet, then what good are the cheap prices for the goods that we see for sale coming in from China and Mexico?

“If you can’t afford to shop at Wal-Mart, then what good are the cheap prices?” is a famous quote from Frank Spotorno, co-founder of bringourjobshome.com

The same can be said for going out to eat. If there are no dollars left after pay day, then a family dinner out is the first thing that’s cut. That is what this story from natesamericanmadestore.com blog, and originally posted on business insider by Haley Peterton.

Not as many Americans are going out to eat as they used to. On the surface, that statement doesn't sound so bad. But apparently, when people stop going out to eat, that’s a big, red flag for the health of the U.S. economy.

Here are the details.

The NPD Group, an industry research firm, recently discovered that restaurant sales are flat. Sales are not expected to rebound this year. And according to Mark Kalinowski, a Nomura analyst, “weak growth in the restaurant industry is a warning sign for the entire economy,” Slate reports.

Kalinowski adds that conversations he’s had with restaurant owners reveal that many owners think they may be losing customers because consumers are concerned about the upcoming U.S. presidential election. That's right. The U.S. presidential race is killing our spirits, and our appetites.

“People spend more when they feel confident about who the president is and the direction he or she is leading the country,” Kalinowski says. “Restaurant owners...hear a lot about how customers are worried about politics, and they don't really care for either presidential candidate. I think Americans’ feelings about those candidates are probably going to be pretty similar on election day to their feelings today.”

To attract more customers, chains, such as Wendy’s, Chipotle, etc., are offering a lot of discounts.

"The deals seem to be working," Slate adds. "While overall traffic to fast-food restaurants was flat, deal traffic increased 3 percent in the first quarter, according to NPD Group. Promotions accounted for more than 25 percent of fast-food restaurants' sales in the quarter."

And although these coupons are great for consumers, they are not great for the chains and could hurt profits. However, it looks like chains won’t be able to stop these promotions any time soon.

Business Insider –post

The restaurant industry is providing some ominous insight into how Americans are feeling about the economy.

Restaurant sales are virtually flat, and they’re expected to remain weak for the rest of the year, according to The NPD Group, an industry research firm.

Weak growth in the restaurant industry is a warning sign for the entire economy, Nomura analyst Mark Kalinowski told Business Insider.

People need to eat, and when they pull back on restaurant spending, it’s a clear sign that they aren’t feeling confident about the economy.

“The whole restaurant industry in aggregate is pretty lackluster,” Kalinowski said. “It’s not impossible for things to get better, but it does look like the odds are against a rebound.”

Restaurant owners have told Kalinowski that one of the main concerns on customers' minds right now is the presidential election.

“People spend more when they feel confident about who the president is and the direction he or she is leading the country,” Kalinowski said.

But consumers are feeling uncertain about both presidential candidates, and that probably won't change—no matter who is elected, he said.

“Restaurant owners...hear a lot about how customers are worried about politics, and they don't really care for either presidential candidate,” Kalinowski said. “I think Americans’ feelings about those candidates are probably going to be pretty similar on election day to their feelings today.”

The spending pullback in the restaurant industry is forcing many chains to offer steep discounts, which is great for consumers but will end up hurting those companies’ profits.

McDonald’s, Wendy’s, KFC, Burger King, and Chipotle are among the restaurants battling for customers with new combo-meal promotions and free food offers.

The deals seem to be working. While overall traffic to fast-food restaurants was flat, deal traffic increased 3 percent in the first quarter, according to NPD Group. Promotions accounted for more than 25 percent of fast-food restaurants' sales in the quarter.

The industry will likely need to maintain this level of promotional activity to keep customers coming back.

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