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I continue to believe that the casual dining industry is not out of the woods yet from a demand perspective and that 4Q comparisons might not be as easy as they look.

The Federal Reserve reported Tuesday that consumers ratcheted back their credit by a larger-than-anticipated $21.6 billion from June, the most on records dating to 1943. Economists expected credit to drop by $4 billion.  Clearly consumers are spending less and some could argue that banks are cutting back on lending.  Either way, lees credit available suggests a lower level of spending overall.  For most Full Service restaurants, 70-80% of transactions are done using a credit card.  The less credit available, the less money there is to spend on discretionary items like eating out. 

This chart clearly tells that story!

RESTAURANT INDUSTRY – CHART OF THE WEEK – CONSUMER CREDIT VS SALES TRENDS - cc