What’s one of the first things people do when they get worried about the economy? They cook more at home and eat out less.
That’s what happened toward the end of 2022. Sales at bars and restaurants fell in both November and December — the first back-to-back monthly declines in almost a year.
Receipts at eating and drinking establishments dropped almost 1% in the final month of last year. Sales also dipped in November.
What’s more, the popular website Open Table showed people were scheduling fewer restaurant reservations at the end of 2022.
“This is one of the canaries in the coal mine,” said corporate economist Robert Frick at Navy Federal Credit Union. “People are pulling back. There is no question about it.”
Bars and restaurants are still doing pretty well, however. Sales jumped 12% from December 2021 to December 2022 and outpaced inflation.
Not only that but the industry is still hiring. Employment has risen for 24 straight months, dating to the start of 2021. Last year, bars and restaurants generated 622,000 jobs.
Yet a softening U.S. economy and slower wage growth — along with talk of recession — appear to have taken a toll. Americans are being more mindful of their money.
Still, it remains to be seen if restaurant sales continue to pull back. Restaurant receipts also declined in the final month of both 2021 and 2020 before bouncing back early in the next year, perhaps because consumers diverted more cash to holiday-related gifts.
“It’s not dire, at least not yet,” said Frick, who puts the chance of avoiding a recession this year in the U.S. at 50/50.
The early evidence from Open Table supports the view of another rebound in restaurant sales. “Restaurant reservation data suggests that January is showing signs of a turnaround,” said economist Katherine Judge of CIBC Economics.