The January Affect

May 21, 2024 | Finconomics 101, No Bull Economics

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It is no secret that restaurant sales fell-off a cliff during January 2024, with everyone conveniently blaming the weather for this anomaly. However, an analysis of the USDA’s historical sales during the month of January for food at home & food away from home reveals another explanation…

Big Picture

  • Covid lockdowns really messed-up restaurant sales which plunged in January 2021 at the height of the scare.
  • However, consumers really returned to restaurants with a vengeance for the next 2 January’s (this was described as “celebratory spending” by Chef’s Warehouse). Of note is how much share shifted away from food at home to food away from home in January 2023.
  • To put this in perspective, food away from home spending represented a +17% increase during January 2023 compared to January 2019 (pre-covid) on an inflation adjusted basis. That’s a big change in consumer spending habits!
  • As the post-covid world normalizes, it is not surprising that food away from home spending would also start to normalize during January 2024 on a year-over-year basis. It seems that consumers are finally done celebrating their freedom to visit restaurants after 3 years of gorging themselves. This is consistent with comments from Potbelly’s management that January’s soft results could be explained by more seasonality returning to consumer behaviors.
  • To be fair, the January 2024 restaurant sales dip also reflected that industry operators have been capitalizing on all this consumer celebration by raising their menu prices at a faster pace than the grocery stores & January’s wake-up call reinforces the idea that restaurant pricing must finally return to terra firma.   

Food at Home vs Food Away from Home Graph

Source: USDA ERS – Food Expenditure Series

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