Photographer: ANDREW HARRER/Bloomberg

Americans' Spending on Dining Out Just Overtook Grocery Sales for the First Time Ever

Could be another reason to blame or credit millennials

Pass the menu, hold the shopping cart.

Grocery stores are finding it harder to make headway with shoppers as a surge in spending at restaurants over the past several months signals Americans are more likely to ditch the brown bags in favor of doggy bags.

Sales at restaurants and bars overtook spending at grocery stores in March for the first time ever, according to Commerce Department data released Tuesday that dates to 1992.

An otherwise fairly unremarkable retail sales report offered some insight into the evolution of American eating habits, hinting at a generational shift that already has restaurants thinking about how to cater to those growing ranks of millennials.

That younger cohort has been identified as being more willing to spend on "food away from home," according to a November report from Morgan Stanley. 

Source: Morgan Stanley

And the National Restaurant Association has caught on. The food services trade association that boasts almost 500,000 members is focused on how to cater to the army of young folks that are set to overtake the baby-boomer generation this year.

"Millennials view dining out as a social event (i.e. a chance to connect)," the Restaurant Association advises on their website. "They tend to favor fast food, deli food and pizza restaurants over coffee shops, high-end dining and casual dining. Their diversity and interest in new things draw them to more ethnic restaurants too."

At the same time, older Americans have been expressing less of a willingness to spend on dining out while funneling more cash toward those grocery trips. The share of 51- to 69-year-olds who said they are spending more on groceries compared with a year earlier outstripped those who said they are spending less by 45 percentage points, according to a Gallup survey conducted Nov. 10-20. The share of those baby boomers spending more on "dining out" was smaller than those who said they were purchasing less at restaurants and bars, by 10 percentage points. 

There is one caveat with the data that should ease concerns consumers will increasingly rely on restaurants for their daily meals. Retailers such as Wal-Mart Stores Inc., Target Corp. and Costco Wholesale Corp. also offer grocery items in their stores, yet they're not tallied in the Commerce Department's grocery-store category. They're listed under "general merchandise retailers," which showed a pickup in sales last month, while still not yet making up for the winter slump.

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