In recent years, restaurant spending has seen a decrease, which is a bit unusual given that the U.S. is in the expansion phase of its business cycle. According to Bank of America Merrill Lynch economists, this trend is a result of millennials moderating their consumer, particularly restaurant, spending. Although restaurant spending has shifted across several demographics, the largest change has been recorded for millennials (Generation Y): from 2015 to 2017, the growth pace of spending decreased from 9% year over year to just 1.6%.

The head of U.S. Economics at Bank of America Merrill Lynch, Michelle Meyer, stated that "it stands out as a bit unusual how soft restaurant spending has been considering where we are in the business cycle. The consumer should be spending more on a broad range of items. But we've seen restaurants slowing more akin to a recessionary environment." These declining restaurant sales also have a considerable effect on overall retail sales data.

The reason for this slowdown in restaurant spending by millennials has generally been attributed to lifestyle changes and the fact that as they get older, they spend on other goods, such as housing and home-cooked meals. However, this is not reflected in the expected uptick in supermarket spending, which has caused a lot of confusion. A possible explanation for the disruption of this trend could potentially be online grocery shopping.

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While it's true that consumers might be going out less, they are also spending more per restaurant visit. This may suggest that millenials are dining out only for special occasions, or that tastes are changing, with millenials more willing to pay higher prices for a quality dining experience.

Meyer also commented that "it's unusual to have this type of restaurant slowdown without having the economy slow down broadly." As the holiday season rolls around and consumers are spending more and going out to shopping centers, we can expect to observe more retail spending in this particular area.

In an interview with CNBC, George Holm, CEO & Director of Performance Food Group (PFGC  ), a national food supplier, analyzed this trend by separating consumer behavior as relates to chain dining and independent restaurants. Data shows that consumers lean towards independent restaurants over chain dining in part because they perceive independent restaurants as being better able to offer the locavore menus and high-caliber service they seek.

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Holm said that this consumer preference for independent restaurants have driven up the value of Performance Food Group. Large chains can bypass suppliers like Performance Food Group to negotiate directly with manufacturers and order in large quantities, but independent restaurants do not have the power to do this. Independent restaurants are therefore more likely to rely on Performance Food Group's products and brands, and are willing to pay higher prices for them.

This is quite an interesting trend to follow in terms of seeing where the dining industry will be headed. Restaurants may need to focus on rebranding and appealing to the millennial generation in order to draw in more customers.