Is no surprise that US consumers would be wary of loosening their purse strings following the Great Recession. But the latest data may raise retailers’ concerns with new insight as to just how drastic and widespread the Recession’s effects have been.
The new research, released Wednesday (Nov. 19) by the National Restaurant Association, found only minimal improvements of consumers’ views of their finances compared with data from 2010. In a survey of more than 1,000 adults, the NRA found that only 8 percent of consumers assessed their personal finances as “excellent,” compared to a similar 7 percent in 2010.
Bruce Grindy, the NRA’s chief economist and author of the report State of the American Consumer, also found that 70 percent of consumers either hold back “significantly” or “somewhat” on their spending. And while the NRA’s study focused on the Recession’s impact on consumer spending on restaurants, the data reveals much broader implications from the economic downturn.
“While it’s not surprising to see that consumers remain uncertain about the economy and cautious in their spending habits, the magnitude of the impact and the fact that it cuts across all demographic groups demonstrate the degree to which the Great Recession impacted the psyche of the American consumer,” Grindy said, adding that 55 percent of individuals in households with income of $100,000 or more are either significantly or somewhat holding back on spending – a finding the NRA calls “somewhat unexpected.”
The study does point out, however, that optimism is growing. While older adults – those ages 55-64 – are less optimistic, with only 24 percent surveyed expecting personal finances to improve next year, nearly half of all Millennials ages 18-34 surveyed see a brighter financial future.
Those findings could prove crucial to the restaurant industry. While the data point out how the Recession changed overall spending habits, the restaurant sector, dependent on a consumer’s willingness to open their wallet, is particularly vulnerable to the numbers.
The study found 38 percent of adults are not dining out as much as they would like – a figure the NRA labels as “pent-up demand.” This could prove good news not only for restaurants, but also for innovative payments companies like Google and Open Table, who are bringing their mobile payments strategies to American diners.
“Overall, these survey results suggest that consumers’ appetite for restaurants remains unfulfilled,” the study says, “and they will be primed to burn off their accumulated pent-up demand for restaurants when they are more confident in their personal financial situation.”