Submitted by Tyler Durden on 03/25/2016 18:58 -0400
While the US manufacturing sector has been in a clear recession for the past year as a result of the collapsing commodity complex, so far the stable growth in low-paying service jobs – at least according to the BLS’ statistical assumptions – such as those of waiters and bartenders have kept the broader service economy out of contraction (even though recent Service PMI data has been downright scary).
This is now changing: as we showed a month ago, according to the lagged effect of the collapse of the Restaurant Performance Index, that party is over:
… just like it was in 2008;
But while such macro indices suffer from the same calendar and statistical aberrations which the BLS is all too famous for, a confirmation of the troubling restaurant downward trend was provided yesterday by company-level channel checks, courtesy of Sterne Agee, which show that same store sales trends at America’s casual dining restaurants – those which cater to the vast majority of the US middle class – have suffered a fourth consecutive month of declines, something not observed since the first financial crisis, sliding a whopping 3% in March.
From Sterne Agee’s March 24 channel checks:
Our channel checks for casual dining suggest a decline in casual dining same store sales (SSS) trends in the first half of March. While it is too early to determine if this is a trend, it appears that a fourth month in a row of negative SSS may occur, which we believe would be a disappointment to investors.
Casual Dining Stocks are Under Pressure in Recent Trading: On a month-to-date basis, we note that casual dining stocks have been under pressure, with an average price decline of -3.1%, including bottom-tier performers: Buffalo Wild Wings -10.2%, Red Robin -8 4% and Brinker -8.3.
To be sure, Sterne Agee tries to spin this disturbing trend as faborably as posible:
While there is much debate on whether the discounting/promotional environment in the quick service (QSR) space is affecting casual dining, we think it is too early to call this a shift in consumer behavior or change in trend.
However, it is becoming all too obviouos that not only has the great gas price collapse of 2015/2016 done anything to boost consumer spending on such core discretionary items as dinner, but that the purchasing power of the US middle class continues to deteriorate with every passing month – having troughed so far in March – and that economists are clueless to explain the reason behind this.
And the worst news is that with gas prices set to anniversary their 2015 lows in a few months at which point they will start rising due to the base effect, suddenly the great “gas tax savings” which did nothing to boost spending, is about to go into reverse, and lead to the next even sharper leg lower in US household spending. We are confident economists will be very confused about the reasons why the US economy is about to deteriorate substantially in the second half, however surely they will find some climatic anomaly to blame it on.
The lore of fine dining or casual dining is waning.
One can construct that $20. salad at home with much
more quality control. And, with a simple lunch coming in
at $50. for four people with a simple budget can’t afford
it. Yes, obviously, this can be blamed on global warming/
climate change.
I predict a restaurant bubble. There are so many that charge $70 for two, with a glass of wine. Now a glass of house wine is $8.
I don’t know how long the millennials can continue to spend their money on dining out.
Not to fear for Millennials .This is why God created peanut butter sandwiches.And of course there’s always potted meat for protein.
bb
You forgot ramen noodles for “that extra full feeling” going forward. 🙂
bb, take you a can of potted “meat” and fry it in a pan: you will get 99% oil and some specks of red.
PS: The $30,000 cars, $200,000 houses, vacations, $20 meals, $200,000 degrees are going bye-bye to the Middle Class Whites.
Where the hell can you buy a $200,000 house?
My Daughter works in an Irish pub and made $300 tips on St. Patties. But then she’s a former model….
I’d appreciate some more comparison prices for restaurants in the U.S. since I moved to New Zealand in 2010. I’ll quote some prices, rember these are THE prices, the tax is always included in the listed price and tipping is NOT expected or the norm over here (of course, all the servers earn $15+ per hour too!
1. Good pub lunch specials are $12 (some have them for $10) and include one which is a sirloin steak (about 8 oz is my guess with fries and a salad) at “The Bristol”.
2. Beer in cheaper places is $6 to $8 for 12 oz bottle or maybe a pint on tap for middling to pretty good ones.
3. Wine by the glass for typical quality (to my jaded taste buds these days not so good but I would have though fine 20 years ago) $8 to $10.
4. Very very nice upscale places: Appetizer (called the entree in NZ) is $12 – $18, The entree (called the main) is $25 – $40 and desert is $12 to $18.
5. You can get Domino’s and Pizza Hut pizza for $5. You can get varous meal deals at Burger King and McDonlas for $5 to $8 (and up actually).
You can frequently get “GrabOne” (think Groupon) deals for 1/3 to half off at a wide variety of good to excellent restaurants.
Wine at the better deal well stocked place in Wellington (Moore Wilson’s): Plenty of decent wine for $8 to $12 per bottle, plenty of what I think are great value and great tasting wines for $12 to $20/bottle). Beer is more than in the U.S. due mainly to how it is taxed, I think. For example, a 6 pack of Corona will probably be $15 to $18 but you can get some really good craft type beers from Tuatara (a local brewery that is craft but now large enough to be be all over the country) for $18 to $22 6 pack or $30 for a 12 pack on the ones they have in 12 packs. A very large 1.5 liter bottle of Grolsch is $15.
Unbelievavble good free range grass fed Black Angus hamburger is about $7 per pound, A kilo of sirloin of the same type is about $35 (about $16 per pound). Lesser cattle types and less rigorous standards of raising the animals and you can get meat still better than in the U.S. for about half to 2/3 that. 30 free range eggs are $12 to $13. A kilo of really good aged 18 month cheddar is $10 (on sale).
What are some prices these days in the U.S.?
@ Didius Julianus
Can’t help you with US equivalents as we have all but stopped eating out. Can’t afford it.
I can give you some examples why we’ve stopped doing this –
In our west coast city any given restaurant menu item will be priced minimum $10.00 as a start point. Most plates will be more in the $20.00+ range. On top of that will be any drink charge[s], an extra restaurant tax imposed by the city, the usual 10% state tax, and service tip minimum of 15% of the bill. Pretty soon your $20 meal becomes a $50 meal. Times 2 people. So a meal ends up at $100 for an hour or so of food and leisure.
Minimum wage here is currently nearly $11 per hour and on it way to legislated $15 in just a couple of years.
Add to that the insult of bad service, bad food, and having to haul your ass across town to indulge in all of that high priced restaurant badness.
We can booze and eat at home for 20% of that price. We all but quit going out about 3 years ago.
I went to the supermarket today. The most expensive things I saw there were:
– cheese and nuts – ! Walnuts/almonds/pecans/hazelnuts/cashews were all going for $11 per lb. and more. Quality cheeses run up to $25 per pound. Prime beef cost $6.99 a lb. (we don’t drink wine, can’t help you there)
We just don’t go out. It’s not worth the money it costs and the shitteous service we are greeted with by our $11 an hour servers who treat us like they’re doing us a favor by carrying a plate from the kitchen to the dining room. Fuck those people.
We be saving our money, eating at home, and drinking booze we order on the internet from out of state to avoid taxes. It’s literally cheaper to pay the transport shipping and handling to get that booze from 1,000 miles away than to pay the state taxes buying it here.
Fuck all of these swindlers.
Thanks Stanley,
Those are some good observations (well, good in the sense of your describing them, not what is going on!). Actually, nearly the same here as far as going out. I eat lunch out per week max and dinner is once every two weeks or less. We do prepare almost everything ourselves and it is amazing how much our “grocery cart” has changed over the years – almost everything from the “outside” circuit of the store.
Nuts are going up quite a bt here as well. We get them from one place only because you can buy larger quantities and get bulk savings. All prices similar to what you noted with cashews being on the cheaper end and walnuts and pecans at the top. The boutique cheese producers (and there are a lot on NZ, the quality is mind blowing) and stuff imported from France, etc. is in a price range similar to what you noted, with the cheaper being in the $15 range and on up to $25 or so per pound.
The service in restaurants in usually good with friendly staff. In fact, that is true across the board in retail establishments here, 90%++ very good service and friendly staff.
All p rices I noted are in NZ dollars so currently from a US POV that makes it cheap mostly. NZ salaries/wages (except at the low end when they are more) are in the same range as US so a Kiwi dollar spends to me here the same as a U.S. dollar did to me when I was there.
Also on the booze, either in the store or mail it is more of the company’s pricking and marketing position, not thst it is mail order or not that makes it more or less as the tax rate is uniform across NZ. Shipping is cheap though, can get a case of wine shipped to your door for less than $10 or even free if the company has that as part of their strategy.
Not quite sure how NZ has adjusted to the higher minimum wage (its about $15/hour) with plenty of staff in the stores/restaurants (usually) and a seeming good economy in most areas. However, the small out of the way rural towns have suffered similar to what has happened in the U.S.
h yeah, one BIG DIFFERENCE, much lower mix of large corporate chain stores. I’d guess that easily 60% plus are mom and pop stores or stuff that started like that and are now small chains.