Grocery Store Sales Growth Tops Restaurant and Foodservice

U.S. food sector retail sales in April increased 2.7% from a year ago, but that was down from a 3.9% year-over-year gain for March. Retail sales across the entire economy for April were up 3.1%. Food sector sales growth has run below trends for the economy since last October, mostly due to a plateau in foodservice and restaurant sales. In April, food service, restaurant and drinking place sales were up 2.2% from the prior April. Grocery store sales were up 3.3%. This was the first time that grocery store sales growth outpaced that of foodservice, restaurant, and drinking places since April 2014.

Food price indices compiled by USDA-ERS (Economic Research Service) supports the shift in consumer spending from away-from-home meals to at-home meals. Grocery store prices from April 2016 to April 2017 were down 0.8% while away-from-home prices were up 2.3%. Beef was a leading component bringing down the price of food in grocery stores, declining 4.2% over the last year. Egg prices showed the biggest decline, down 15.8%.

The Restaurant Performance Index (RPI), a survey from the National Restaurant Association membership, echoed the trend in retail sales from the U.S. Census Bureau during April. Current situation sentiment measured by in the RPI declined 2.3% from March to April. Same store sales were the biggest contributors to the decline, falling 3.9%. The segment of the survey dealing with expectations for future business was not so downbeat, but was still guarded. The overall expectations index declined 0.7% in April. Same store sales expectations were down 0.5%. Looking forward, the biggest bugaboo for restauranteurs is labor and staffing.