In his latest commentary, the National Restaurant Association’s Chief Economist Bruce Grindy broke down the latest trends in household income. Although real median household income remained stagnant in 2012, the number of higher-income households grew for the first time in five years. Representing more than half of all spending on food away from home, an increase in these households is a positive development for the restaurant industry.
Household income remained stagnant in 2012, according to the latest figures from the U.S. Census Bureau. Real median household income was $51,017 in 2012, essentially unchanged from 2011 and down 8.3 percent from its recent cyclical high in 2007. In addition, real median household income stood at its lowest level since 1995, a trend that is concerning for the economy.
But looking inside the numbers, there are some positive signs for the restaurant industry, as the number of higher-income households rose for the first time in five years. The number of households with annual income above $75,000 numbered 41.3 million in 2012 – up 3.0 percent from a total of 40.1 million in 2011. This marked the first gain since 2007 and the largest increase in higher-income households since 1999.
While the growth is a move in the right direction, the number of higher-income households still remained 1.1 million below the record high reached in 2007, when there were 42.4 million households with income above $75,000.
The potential implications for the restaurant industry are significant, as higher-income households represent the majority of spending in the industry. According to data from the Bureau of Labor Statistics, households with incomes of $100,000 or higher are responsible for 38 percent of the total spending on food away from home, while households with incomes between $70,000 and $99,999 account for 19 percent of industry spending.
Drilling down to the state level, only a handful of jurisdictions enjoyed gains in household income during the last five years. Only the District of Columbia and five states – North Dakota, Wyoming, Vermont, Texas, and Oklahoma – saw their median household incomes rise between 2007 and 2012. On the opposite end of the spectrum, 2012 median household incomes in Nevada and Hawaii were more than 20 percent below their 2007 levels.
