A spokesman for the NRA, senior VP Hudson Riehle, credited recent improvements in real disposable income (+2.5% year-over-year gain in October, the highest increase in more than two years) as the main driver of increased restaurant activity in October. Further, Riehle says that with the upcoming holiday period ahead, it is definitely turning into a sales growth momentum environment for the restaurant industry, which is expected to carry well into 2011.
Consumer spending at restaurants is highly cyclical, and consumers can easily reduce this type of discretionary spending as economic conditions weaken, and this is exactly what the graph above shows. In fact, consumers starting cutting back on restaurant spending in the late summer of 2007, even before the recession officially started. The upward trend in the restaurant index over the last year suggests that consumers are gradually becoming more confident and eating out more often, and it looks like this trend will continue.
