Wednesday, September 14, 2011

Ongoing Restaurant Pain

The following chart compares restaurant sales to all food and beverage sales.

Click to enlarge.

This ratio peaked in December 2006 at 45.27%. In August we hit 43.98%.

Another month, another month of pain.

In my opinion, short of subsidizing the restaurant industry with more money/credit we do not have, there is nothing the government can do to prevent the ongoing decline. It has already thrown the kitchen sink at it. What's left?

Now picture what would happen if the ratio dropped to what it was before the fake prosperity of the dotcom and housing bubbles. Ouch.

Source Data:
U.S. Census: Retail Trade


Stagflationary Mark said...

September 13, 2011
Casual Dining Chains In Jeopardy

Restaurants with good brands, management and cash flow are favorable long-term investments when the economy is strengthening. When the climate changes, the impact is rapid. Weakening consumer sentiment hits restaurant operators fast. The negative impact will be slightly muted for low-cost restaurants as diners transition down the food chain. Yet the entire group is currently vulnerable.

Troy said...

$500B/yr of gas money going from people's paychecks to money heaven adds up.

if gas were $2/gallon again we could eat out twice as much!

Instead, that money goes to some vault somewhere.

Can't model an economy without modeling the cash flows, LOL.

Not one person in a 1000 knows this graph: yet it is the story of how we got here.

Stagflationary Mark said...


Here's another story of how we got here. ;)

“Life is short
And pleasures few
And holed the ship
And drowned the crew
But o! But o!
How very blue
the sea is.”
- Clive Barker

Stagflationary Mark said...

Friday is going to be an interesting day by the way. The next Z.1 report is released.

That means the CMDEBT chart will have three months more data to look at.

I'll be doing an exponential trend analysis on it. So many exponential trends, so many failures.

CP said...

Will we cross 1200 again?? My goodness, so many times!!

Stagflationary Mark said...


Well, I certainly hope I didn't offer that musical tribute in vain! ;)

fried said...

I think the restaurant chart needs to break out NY and DC, and possibly LA.
Reason: expense account lunches. The high end in NY seems to be doing just fine, thank you and I'd bet dollars to donuts that industry hangouts in LA and Congressional and lobbyist haunts in DC are pulling in big bucks too. It's the smaller, mid-priced places that are getting hit, even here in NY and I assume elsewhere.
More bifurcation, and austerity has not really arrived yet. Just wait.

Stagflationary Mark said...


Well, it would make sense that the "free lunches" would appear in NY and DC. Can't argue with that logic.

Stagflationary Mark said...

Check this out.

Cross Ledge's Wachs on U.S. August Retail Sales

Sales unexpectedly stagnated as a lack of employment and limited income growth restrained demand, highlighting the risk the economy will stall.

Yes, it is very unexpected.

Forehead. Desk. Whack. Whack. Whack.

MaxedOutMama said...

The "unexpected" keeps dropping on our heads.

You have to wonder why all of this is so unexpected - is it really true that the commercial analysts are that far out of touch with reality, or did the entire country adopt a "hope" strategy?

I completely and absolutely agree with Troy - unless you pay attention to cash flows, you aren't paying attention to the economy.

Stagflationary Mark said...

MaxedOutMama (& Troy),

In 2004, the mailbox filled with 0% mortgage offers but the fine print showed future cash flow pain.

Cash flow pain continues.

dearieme said...

We rarely go out for dinner but we did on Tuesday evening. I had rabbit, accompanied by a Belgian wheat beer. My wife had duck, accompanied by an Australian red. If international trade dies, such jollity will end.

Seize the day, me hearties, seize the day.

Charles Kiting said...

That decline isn't happening very quickly. And I haven't seen any shorter wait times at restaurants.

What I have seen is people ordering one beer instead of two, soft drinks instead of cocktails, and water instead of soft drinks. For all we know this trend could simply be the result of DUI crackdowns from cash-strapped municipalities.

Stagflationary Mark said...



I had a cheese sandwich using the very finest in Kraft singles combined with homemade bread-maker bread and just a touch of mayo.

I may not be seizing the day, but I am seizing up the heart(ies), lol. ;)

Stagflationary Mark said...

Charles Kiting,

The restaurant water to soft drink ratio continues to rise for me.