The Thanksgiving holiday season boasted strong consumer spending, especially for the restaurant industry. Economic indicators predict a strong holiday shopping and dining season thanks to rising wages, strong consumer confidence and shrinking unemployment rates, according to First Data.
From Thanksgiving to Cyber Monday, overall spending increased 5%. For dining, that meant 4.1% increase compared to last year, according to First Data's Holiday Insights, which analyzes debit and credit card transactions to monitor spending trends.
"People are employed. They have a lot of confidence," Glenn Fodor, First Data senior vice president and head of First Data Insights, told Restaurant Dive. "Small businesses are feeling really good for the outlook. You have this perfect storm for the customer."
During the third quarter, the U.S. economy grew 3.5% and boasted the strongest quarter of consumer spending over the last four years, according to Inc. The unemployment rate, which dipped to 3.7% in September, is at its lowest rate in 50 years, according to NPR.
The overall restaurant industry, despite the volatility of the stock market and tough comps from last year, posted significant year-over-year growth in 2017, according to Fodor. Catering sales are expected to grow by 25% and reach $67.8 billion by the end of the year, according to Nation's Restaurant News. Leading up to the holiday season, restaurant spending was up 4.7% overall during the third quarter, while quick-service restaurants boasted growth of 7.9% and fast casual had growth of 3.7%, according to First Data's Q3 report.
"The kick-off to the holiday season was solid considering the comps [restaurants] were up against," Fodor said. "Dining has had some of the best trends all year, particularly in quick-service restaurants."
Quick-service dominates holiday season
The strength of the restaurant industry was none more clear than in the quick-service segment, which is expected to grow 4.6% globally through 2022. QSR dominated total restaurant spend through the Thanksgiving holiday, taking 44% of the total spend on Thanksgiving and Black Friday, and had the largest growth rate. From Thanksgiving to Black Friday, dining spend grew 7.3% year over year and 6.6% from Thanksgiving to Cyber Monday. Leading up to the holidays, spending growth was up 7.2% year over year, according to First Data.
"Quick-service restaurant growth has been phenomenal all year long well over the last year," Fodor said. "These folks have really locked down their mobile offering."
Whether it be Chick-fil-A, Starbucks, Panera, Domino's or McDonalds, quick-service restaurants have upped their game with their mobile offerings, he said.
"That is how consumers want to shop today, and quick-service restaurants are ripe for that offering," he said.
Delivery also has helped prop up dining since consumers end up spending more when they order online versus in store. Consumers spent $27 per ticket, $8 more than dine-in, during Thanksgiving and Black Friday, according to First Data.
Another positive indicator came from fine dining. By the end of the third quarter, fine dining posted a 1% increase after quarters of negative growth.
"It broke out of this hump of consistently negative growth," Fodor said.
While pre-holiday spending for fine dining was down 1.1%, spending increased 3.9% for the category through Thanksgiving and Black Friday and 1.4% from Thanksgiving to Cyber Monday, according to First Data. This growth rate outpaced fast casual, which grew 2.6% Thanksgiving through Black Friday and 2.7% from Thanksgiving to Cyber Monday.
The strong year and Thanksgiving season have set the industry up for a strong finish through the end of the year and into New Year's.
"The consumer is there, the balance sheets are healthy," Fodor said. "I see nothing that would disrupt the apple cart right now."