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For Immediate Release	Contact: Andy Deloney
December 20, 2005	517/377-3931

It’s becoming old news: Michigan restaurant sales taxes dip again in 3rd quarter of 2005
3 percent drop results in fourth straight quarter of lower revenues

LANSING, MI – The Michigan Restaurant Association (MRA) announced today that, in the third quarter of 2005, sales taxes collected from Michigan restaurants and taverns dipped more than three percent from the third quarter of 2004 overall.  The data was just released by the Michigan Department of Treasury on Monday.  For the first three quarters of 2005, this industry has produced over $443 million in sales tax revenues for Michigan, compared to more than $456 million in the same period of 2004, a drop of 2.8 percent.

According to Andy Deloney, MRA’s director of public affairs, while the news isn’t good, it’s part of a pattern.  “This is getting old,” said Deloney.  “Michigan’s economy continues to take its toll on our industry.  While the rest of the country is recovering from the recession, we are lagging behind, and these numbers prove that.”

This marks four straight quarters in which revenues produced in a quarter were lower than in the previous year.  In the months of July, August and September 2005, restaurants and bars collected and paid over $159 million, compared to over $164 million in the same months in 2004.  This represents a reduction of 3.2 percent.  This was due primarily to yet another major decrease in sales tax revenues collected from bars, while other sectors, including full-service and quick-service restaurants, held relatively steady or saw modest increases but couldn’t quite offset the loss.

Full-service restaurants tread water

The full-service restaurant category saw its sales tax revenues decrease slightly, by 0.7 percent, producing more than $74 million.  In the third quarter of 2004, this sector produced more than $75 million.  The hotel dining category saw its sales tax revenues decrease by 4.4 percent, producing just over $300,000, compared to over $314,000 in the third quarter of 2004.

Quick-service produces modest gains

The category that includes quick-service restaurants and pizzerias saw a 3.2 increase in its sales tax revenues, producing more than $56 million in the third quarter of 2005.  In the same quarter of 2004, this sector produced over $54 million.  Overall, the increases could not completely offset the loss of revenues produced by bars.

Watering holes lose big … again

The biggest change, yet again, occurred in the bar with food incidental category, where sales taxes plunged nearly 30 percent from the third quarter a year ago.  This is the fifth quarter in a row where bars have produced significantly less compared to the same period in the previous year.  In the third quarter of 2005, this category produced sales tax revenues that were 29.6 percent lower than the third quarter of 2004.

However, while bars dropped significantly yet again, night clubs and discotheques performed well, producing an increase of over 17 percent in sales tax revenues in the third quarter.  This sector produced over $823,000 in the third quarter, compared to just over $700,000 in the same period in 2004.

According to Deloney, the transformation in the Michigan economy and lifestyle changes provide the best explanations for the numbers.  First, Deloney explained, job losses have reduced disposable income.  “As people have seen income reductions, disposable income has dried up.  A meal in a restaurant is much more of a luxury now for many.  The same goes for bars.”

But the economy alone doesn’t explain the numbers.  According to Deloney, quick-service and take-out options continue to be a growing and expanding trend for Michigan diners.  “As our lifestyles have become busier and more hectic, we have less time to sit down to eat – whether at home or in a restaurant.”  As a result, Deloney says, Michigan citizens, particularly young families, are going through drive-thrus, stopping at a local sandwich shop, or calling ahead to a casual restaurant for curbside service.  Deloney added that, naturally, as the demands of the dining public have changed, restaurateurs have necessarily adapted.

The last quarter in which the industry produced an increase in sales tax revenues was the third quarter of 2004, when Michigan’s restaurants collected six percent more sales tax revenues compared to the same period in the previous year.