According to the U.S. Census Bureau, monthly restaurant sales have eclipsed grocery stores in April and May. This report represents the first time since the start of the pandemic that Americans were spending more on eating out than at home. This is unequivocally a cause to celebrate for an industry that was one of the hardest hit by the economic headwinds of the COVID era. However, looking deeper at the numbers posted by the industry this spring, we can see just how remarkable this comeback truly is and how we see signs of a significant shift in how Americans spend on food and drink.
Restaurant sales in May reached $67.3bn on a seasonally adjusted basis. Not only was that a high-water mark in the post-COVID economy, but it also broke the all-time monthly sales figure for restaurants set in January 2020 by $1.1bn. It makes sense that we would be more geared up than ever to dine out again with our friends and family after over a year in lockdown. However, what makes that $67.3bn all the more impressive is that it was spent in a sector that has shrunk by over 10% since last year. According to one report, over 110,000 restaurants have permanently closed since the onset of COVID-19.
While we can all celebrate what this means for restaurants, the other remarkable thing we’ve seen is how our grocers continue to thrive. Many predicted that 2021 would be a challenging year for the grocery industry when restaurant sales picked up steam. Yet while grocery sales again trail restaurant sales, they are still growing at their own pace and remain significantly elevated from pre-pandemic levels. In fact, May was the second best sales month on record for groceries at $66bn (it will be some time before we eclipse the Great Stock-Up of March 2020, which saw grocery sales reach $74.2bn). Compared to 2019, grocery sales are up 14% and have grown nearly $4bn since the start of 2021.
Retailers like Walmart and Target have long known that omnichannel shoppers spend more in-store and online than their single-channel peers. With grocers increasingly leaning into digital sales, they appear to be reaping those same rewards and are better positioned for the future than they were going into the pandemic. The pandemic reset the personal priorities of many Americans around the notion of spending more time with friends and family, which means that both socializing in public and entertaining at home will become more a part of our daily lives than they have been in decades.
All this bodes well for these two very important sectors to the shopping center landscape. As a retail landlord, we are well-positioned to benefit from these trends. There may never be a better time to open a new restaurant than in 2021. Many of the largest national chain & franchise restaurant concepts have announced almost 4,000 new locations set to open this year, representing 10mm SF of GLA. On the independent front, many talented chefs and entrepreneurs who closed up shop last year will be looking to innovate by creating the next generation of exciting dining experiences, and we will be there to help them with plenty of space available, built out and ready for business! Meanwhile, our grocers will be prime traffic drivers to our centers as they continue to prove that last-mile fulfillment works best when you are well-positioned in proximity to your customers. Looking ahead, one thing no one might have predicted at the beginning of the pandemic was how food-oriented concepts would become even more important to the makeup of a shopping center than they already were.