Experts Urge Caution as Restaurant Sales Grow

Restaurants saw a modest same-store sales increase July, continuing a months-long trend of positive growth in the industry. Still, experts warn that the health of the industry may soon be affected negatively by declining traffic and a contracting labor market.

According to an article in Nation’s Restaurant News, TDn2K’s Black Box surveyed weekly sales data from more than 30,000 restaurants representing more than 170 brands to measure the health of the industry. While sales were up in July, traffic was down, suggesting that the gains are driven predominantly by price increases.

Joel Naroff, President of Naroff Economic Advisors and economist for TDn2K warned that consumer spending may be temporarily inflated and is likely to slow within the year.

“Wage gains remain limited and continue to expand at a lethargic pace,” he said. “While that has yet to affect consumer spending, which is being hyped by the tax cuts, it raises questions about the ability to sustain the solid consumption over the next year.”