Restaurants benefit from post lockdown comeback … but for how long?
Despite lockdowns and increasing inflationary pressures, restaurant spending across the country has increased as people head out to eat rather than stay in.
This may change as the higher spending is in part, due to the savings generated during lockdown. This is now being reined in by the Reserve Bank of Australia through higher interest rates.
According to Macquarie analysts, spending at cafes and restaurants has soared 26.9 per cent in the past year.
Normalisation is expected to occur as household savings erode and consumers move back to home cooked meals.
“Despite cost-of-living pressures, consumers look to be making up for lost time and enjoying meals out of the home. Cafes and restaurants were the main beneficiaries,” Macquarie said in a note to investors.
“We note that food inflation for the March quarter was up 5.3 per cent. Data for the June quarter will be released by the ABS on July 27.”
Macquarie believes it is only a matter of time before rising interest rates have an impact.
“Although retail spending continues to grow overall, we remain cautious on the current trajectory as cost-of-living pressures mount. Areas of concern are particularly in mortgage costs and energy markets — noting that the RBA’s 50bps (basis points) increase in the cash rate to 1.35 per cent is likely to flow through to debt servicing costs.
“These unavoidable expenses, coupled with increased cost of food and petrol, is likely to lead consumers to reduce discretionary spend to offset these costs.”
Irit Jackson, 7th July 2022
