Inflation and Outlook Woes Persist Despite Improving Sales

The negative news around the economy and inflation the last few months is seeping into how restaurant operators see the future.

The National Restaurant Association’s June 2022 Tracking Survey found that only 18 percent of operators expect economic conditions to improve in the next six months – the lowest reading since the pandemic began in March 2020 (15 percent). Further, 43 percent of operators believe conditions will worsen in six months while 39 percent expect them to stay the same as they are now.

It was only the second time in the 20-year history of the survey that more than 40 percent of operators said they expect economic conditions to worsen. The only other time so many respondents were pessimistic about the economy was in 2007 as the Great Recession began. “Restaurant operators are on the front lines of the U.S. economy and are often the first to notice any changes in consumer behavior or economic conditions,” the association said. “While operators’ growing economic pessimism does not guarantee that a recession is imminent, it has risen to a level that requires close monitoring in the months ahead.

One of the biggest drivers of recession fears has been inflation. Those concerns are only likely to expand as the consumer price index rose 9.1 percent in June over the last 12 months, according to the U.S. Bureau of Labor Statistics. The number was the largest annual increase since November 1981.

The negative economic outlook comes even as restaurants continue to see higher sales. Eating and drinking places logged $86.1 billion in total sales on a seasonally adjusted basis in June, according to the latest data from the U.S. Census Bureau. That represented a 1 percent increase from May and the fifth consecutive month of gains. The National Restaurant Association expects the upward sales trend to continue as job growth and pent-up demand for dining remains strong.