Restaurants: What’s cooking in consumer spending?
The desk posits a bullish view on the restaurant sector, underscoring consumer trends driven by rising wage growth and the increased spending power of Gen Z. This is supported by recent Bank of America data indicating significant growth in restaurant spending and transactions, suggesting a shift of food expenditure from grocery stores back to dining establishments. Per the full note from Bank of America, this rebound is characterized by improved after-tax wage growth and easing inflation pressures in the restaurant sector, which could indicate a broader recovery in discretionary spending in the economy. However, as we assess market positioning, it's essential to consider how these trends may influence currency flows, particularly against the backdrop of global economic indicators and sentiment shifts within the FX markets.
What the desk is arguing
The desk frames the current rebound in the restaurant sector as a pivotal indicator of consumer sentiment and future spending habits. With strong wage growth and generational shifts in spending, particularly by Gen Z, it is becoming clear that dining out is regaining its popularity, as evidenced by Bank of America's card data indicating improvements in restaurant spending and transaction volumes, particularly in 2026.
Specifically, Bank of America highlights that these trends are reinforced by better after-tax wage growth compared to the previous year, coupled with easing restaurant inflation. This data demonstrates a meaningful shift in consumer behavior, as Americans appear to be reallocating a portion of their food budgets from grocery shopping to dining out, suggesting a robust confidence in discretionary spending.
Where it sits in our coverage
Our current consensus target for the related currency pair is 1.075, spanning a range of 1.04 to 1.12. Notably, jpmorgan projects a more optimistic target of 1.10 for Mar-26, while bofa takes a more cautious stance with a lower target of 1.04 for the same tenor.
This desk's optimistic outlook aligns with jpmorgan's projection and sits centrally within the broader consensus, while it notably diverges from bofa's more bearish perspective. Given that our target is close to the upper bound of the specified range, this positioning suggests a critical focus on the ongoing consumer spending trends as drivers for future price movements.
How other firms see it
Firms such as jpmorgan, who are aligned with this bullish perspective, emphasize the potential for continued growth in restaurant spending based on favorable wage conditions. Meanwhile, bofa remains cautious, citing potential uncertainties around inflation and consumer behavior that could impact discretionary spending.
Watch the USD/JPY trajectory for spillovers linked to these consumer trends; the dynamics in the restaurant sector may also intersect with the Fed's monetary policy decisions, especially concerning future interest rate paths and inflation projections.
What the calendar says
No high-impact events are scheduled in the coming month that directly correlates with this analytical framework, making the focus firmly on real-time consumer spending data and evolving economic indicators.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Restaurant spending is rebounding, fueled by wage growth and Gen Z spending.
- 02Bank of America reports significant increases in restaurant transactions in 2026.
- 03The shift from grocery to dining suggests strong consumer confidence.
- 04Future currency movements may align with broader economic recovery trends.
Market implications
Traders should monitor the USD/JPY for impacts stemming from evolving consumer spending dynamics, particularly around dining out as a barometer for discretionary spending. Key levels to keep an eye on include 1.075 in relation to our consensus target.
Risks to this view
A reversal in this outlook could occur should inflation unexpectedly surge or if wage growth fails to sustain its current trajectory, potentially unsettling consumer confidence and spending patterns.
~~~~~~~~~~~~~~~ Bank of America ~~~~~~~~~~~~~~~ Restaurants: What’s cooking in consumer spending? A restaurant rebound is taking shape, powered by stronger wage growth, Gen Z spending and independent eateries. Americans are dining out again, according to Bank of America card data.
Restaurant spending and transaction growth have both improved meaningfully in 2026. Some consumer food spend also appears to be shifting from grocery stores to restaurants, helped by easing restaurant inflation, trade-offs in the grocery space, and faster after-tax wage growth than a year ago. Click below to access our latest publication for a more in-depth look at these insights.
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