Millennials pull back on dining out

Smacked down by the economic downturn, Millennials are doing something that no previous generation of 18- to 34-year-olds has done before them: eating out less.

Millennials are eating out roughly once a week less than the same age group's eating habits in 2007, according to an eye-opening report out Monday from NPD Group.

"This is a shift of biblical proportions for the restaurant industry," says Harry Balzer, chief industry analyst at researcher NPD Group, which surveyed 2,400 adults 18 to 34 nationwide. "I've done this for 35 years, and we could always count on this age group as the biggest restaurant users. But not the last five years."

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The news is a punch in the gut for $632 billion restaurant industry, which is already struggling. Its most important generation of eaters appears to be drifting away. Behind this cultural change is a generation utterly unable to rebound from the financial effects of the recession. Many who are unemployed or underemployed are returning home with their heads down and their hands out. This, in turn, is slowing the growth of the restaurant industry and left it in a nasty battle for market share.

The statistics are jarring: Millennials will eat out 202 times annually this year vs. 252 times a year back in 2007. Not only are adults 35 to 49 going out to eat more than Millennials, but so are adults over age 50. Until recently, Millennials were the generation that could always be counted on to eat out more than anyone else. They don't spend more, but they have historically eaten out more. Now, even that is changing.

"The load of the recession has hit them harder than anyone else," Balzer says.

Indeed, the unemployment rate for 18- to 34-year-olds for October was 10.8%, considerably higher than the national unemployment rate of 7.9%, the Bureau of Labor Statistics reports. Many jobless Millennials who were living away from their parents have since been forced to return home. And returning home can often mean more home-cooked meals.

But executives at the National Restaurant Association, while aware of the high unemployment rate of Millennials, say they are not panicking.

"I don't see a stampeding to the home kitchen by this age group," says Hudson Riehle, the restaurant trade group's senior vice president of research. He says consumers will spend a record $632 billion eating out in 2012, up 3.5% from 2011.

Because Millennials have had serious employment challenges, they're more careful about what and how they spend, Riehle says. "It's important to nudge that age group to use restaurants," he says.

But Balzer says that might not be enough.

"Everyone in the restaurant industry is in a market share battle because of this," he says. "It's a generational shift."