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Why People Are Dining Out Less

Brexit might exacerbate the trend

Consumers are eating out less in recent months, due to uncertainties regarding the economy. According to the Wall Street Journal, restaurant visits have "completely stalled over the last three months." Despite a slight bump in traffic related to deal-based promotions at fast food restaurants, visits to all types of restaurants — fast-food and full-service — remain flat.

Slow job growth and rising gas prices may be partly to blame, reports the Journal, and the U.K.'s plans to exit the European Unit may exacerbate the trend. The WSJ notes that "visits to fast-casual restaurants, long the bright spot of the industry, declined last month for the first time since 2004," according to data from market research firm NPD Group. Chipotle is probably at least partly to blame for the industry's overall drop.

"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."

Nomura analyst Mark Kalinowski told Business Insider that the trend should serve as a warning sign about the economy overall: "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 weak growth is affecting both sit-down and fast-food restaurants — Kalinowski told Business Insider "the whole restaurant industry in aggregate is pretty lackluster" — and drive-thrus have tried to combat the trend by offering value meals and other discounts. The move worked, somewhat. According to NPD, promotions accounted for more than 25 percent of fast-food restaurants' sales during the first quarter.

And though value meals continue to be popular, serving cheap food at an even cheaper price could negatively impact fast-food chains' bottom lines. An NPD Group spokesperson says deal traffic increased three percent at fast food restaurants in the first quarter. But overall traffic at fast-food chains didn't grow in April, May, or June. Historically, fast-food visits have grown two percent each quarter since September 2015.

The National Restaurant Association's Restaurant Performance Index (RPI), released each month, tracks the health and performance of the U.S. restaurant industry. The latest report, released May 31, represented the third consecutive monthly decline in expectations (i.e. a decline in sales and spending).

But the Association claims not all the news is bad. "Although April represented the third consecutive monthly decline, it marked the 42nd consecutive month [expectations were] above 100," reads a report detailing the RPI. "However, operators' six-month outlook for sales softened for the second month in a row and their opinions are mixed about the direction of the overall economy."


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