Economy Stinks for Many, But It's Crushing Millennials

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Real Happy Hours

Welsch and others like him are riding out the economic downturn by reducing expenses such as dining out to celebrate birthdays. The gang used to gather at "a nice, mid-range restaurant — ot McDonald's," he said.

But with the group unemployed or hours cut back, that tradition has been scrapped too. "We have to skip out on nonessentials like eating out, which is fun," he said.

With so many young people struggling, there could be a ripple effect for the restaurant industry. Younger diners traditionally have helped define eating trends as early adopters. "This group has been influential in their choices," said NPD analyst Balzer.

As a comparison, those aged 50 and older are eating out more since the depths of the 2008 financial crisis — 209 times annually this year compared to 197 outings for the year ending July 2007, according to the NPD Group's research.

So while older Americans fill sit-down restaurants, you'll likely find young people at bars, and enjoying a cheaper beer and snack.

"We're a big fan of happy hour," said Welsch. "If we're going out for drinks, it has to be happy hour — or we wouldn't do it."

With additional reporting by Erin Horan.

— By Heesun Wee, CNBC.com