Restaurant Spending Hits Record High, Surpassing Grocery Purchases

In October 2024, restaurants claimed a market share of 56.4%, surpassing grocery and supermarket spending for the first time, according to data from the U.S. Census Bureau. This marks an all-time high for the domestic restaurant industry. Mark Kalinowski, president and CEO of Kalinowski Equity Research, noted that the year-over-year gain in restaurant market share was about 40 basis points, showing a slight acceleration from September’s 30 basis-point increase.

The Census Bureau also revised September’s retail sales data upward, reporting positive growth. “After the uptick we saw in September, which was later revised even higher, the U.S. Census Department of Commerce reported more good news for October,” said Chip West, retail and consumer behavior expert with RRD. October saw retail sales rise by 0.4% month-over-month and 2.8% year-over-year, indicating strong consumer spending.

West highlighted that businesses reintroducing return-to-office policies had a positive impact on the restaurant sector, as dining establishments, which struggled due to reduced weekday traffic since the COVID-19 pandemic, benefited from the return of office workers. This trend is expected to boost weekday lunch and happy hour traffic, helping to revive these businesses.

As the holiday season approaches, West also noted that restaurants offering catering services could attract consumers planning to host holiday gatherings.

Kalinowski observed that while restaurant same-store sales growth had slowed toward the end of the third quarter, it appears that the worst may be behind the industry. Looking ahead, he indicated that the restaurant sector could see easier same-store sales comparisons in 2025, which might lead to stronger growth.

However, he pointed out that overall spending on food and beverages from January to October 2024 has not grown as rapidly as in the past few years, suggesting a shift in consumer spending habits.