This large, diverse group prefers restaurants to grocery stores – good for butter and cheese but not so much for milk consumption. In March for the first time ever, Americans spent more money at restaurants than they did on groceries.
A recent report from the U.S. Department of Commerce showed that consumers spent $52.35 billion at restaurants and bars in March, substantially more than the $49.69 billion they spent at grocery stores last month.
“The dairy industry typically benefits when consumers choose to dine out rather than eat at home,” notes Sarina Sharp, agricultural economist with the Daily Dairy Report.
Spending at restaurants in March climbed 13% above February outlays and was 6.8 percent more than what was spent in March 2014. Spending at grocery stores also increased, but by a much narrower margin, says Sharp. Sales at grocery stores rose 7 percent above February levels and were 1.9 percent higher than they were in March 2014.
“The increase in restaurant spending was driven almost entirely by millennials,” says Sharp.
Also known as generation Y, the millennial generation—those born between 1980 and 1999—is more diverse than the baby boomer generation (56 percent white vs. 72 percent, respectively), according to the U.S. Census. The millennial generation is also larger at 87 million vs. 76 million for the boomers. While millennials are credited with pushing restaurant spending above grocery store expenditures, baby boomers at the same time are spending more to eat at home, while spending less to eat out.
A Gallup poll taken last November found that boomers were actually spending more on groceries and less on dining out than they did the year before. According to Gallup, the share of boomers who said they were spending more on groceries compared with a year earlier outstripped those who said they were spending less by 45 percentage points. The share of boomers spending more at restaurants was 10 percentage points smaller than those who were purchasing less at these establishments.
Historically, more cheese and butter is consumed in restaurants than at home. “As millennials replace baby boomers as the drivers of consumer spending, though, the benefits to dairy demand are far from assured,” says Sharp. While some dairy products—like butter and cheese can be heavily consumed in restaurants, consumers tend to drink more milk when they eat at home and drink beverages other than milk when eating out.
The National Restaurant Association, which boasts almost 500,000 members, is now focusing on how to cater to those in the millennial generation who tend to view dining out as an opportunity to try new things.
“These younger consumers tend to go to ethic restaurants more so than fine dining establishments where meals are more likely to start with a basket of bread and butter,” says Sharp. Some ethnic cuisines are heavy in their use of cheese, butter, and yogurt such as Italian, Mexican, and Indian, while other cuisines such as Chinese, Thai, and Japanese use less dairy.
“To assure that dairy remains on the menu for millennials, the dairy industry will need to be mindful of the latest dining trends and offer a variety of new or more-conveniently packaged products,” Sharp adds. “Fortunately, today’s relatively low dairy product prices could encourage restaurateurs to include more dairy in the mix as they seek to attract and retain the next generation of diners.”
By Fran Howard
Source: AgWeb.Com