Grocery Stores, Dollar Stores, C-stores see Customer Inflows Restaurants Customer Outflows

 

If you run a restaurant specifically a chain restaurant you are in most cases exhausted from all of the changes your company has made during the pandemic trying to keep customers, protect your brand, secure the technology you deploy. Consumers are dynamic not static it is imperative that you keep-up with them or you will lose them forever.

Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®, stated, “the restaurant sector is suffering a self-inflicted wound by having stuck to an outdated business model for to long. Serving one customer one meal at a time worked great in 1970, 1980, 1990, then started to slip away. Those who tried to maintain that business model have simply continue to see year over year customer count migration away from their brand and in many cases away from restaurants altogether.

Just look at the most recent information from BlackBox Intelligence as they found that restaurant industry year over year comparable sales were up 4.1% but that industry comparable year over year customer traffic was down 8.4%. Year over year customer counts at restaurants have now been negative for 9 of the last 11 years, that is simply unsustainable.

According to Johnson the reason is simple, disequilibrium in the Price, Value, Service offered with the restaurant sector. Regular readers of this blog know that menu price inflation at restaurants has been greater than the CPG product prices increases at grocery stores for the past 7 years, once again that is unsustainable for restaurant operators.

Now that dollar stores, and c-stores are battling for restaurant customers as well the Battle for Share of Stomach is proving much more complex than it was during the hay of the restaurant industry according to Johnson.

That said, U.S. consumer prices rose 7% over year-ago levels in December, the Bureau of Labor Statistics reported Jan. 12, in the biggest year-over-year jump since June 1982. That beat November's eyebrow-raising 6.8% increase and October's 6.2% spike.

This is important you may want to read this paragraph twice. So, prices for food at home (grocery prices) rose 6.5% over the course of 2021—that's compared with a 10-year average annual increase of 1.5%, according to the BLS. The same supply-side price pressures affecting grocers affected restaurants, too: Prices for food away from home were up 6% year over year in December, with full-service restaurant prices rising 6.6% in that time and fast-food/fast-casual restaurant prices jumping 8%.

Where ever consumers are getting meals, meal components, or ingredients for meals they’re noticing price increases. Within grocery, prices in all six food-at-home categories that the BLS tracks rose during the year, although meat, poultry, fish and eggs saw a small reprieve in December (down 0.4% vs. November) from the soaring inflation that dominated the category in 2021. For the full year, prices for meat, poultry, fish and eggs were up 12.5% from December 2020 levels.

In December, fresh produce saw the biggest jump in prices on a monthly basis, with fresh fruit prices rising 1.8% over November alone. For the year, fresh fruit prices were up 7.9%. 

Other food-at-home subcategories seeing outsized inflation for the year:

·         Beef (prices up 18.6% vs. December 2020)

·         Pork (up 15.1%)

·         Eggs (up 11%)

·         Poultry (up 9.5%)

·         Fish (up 8.4%, led by fresh fish and seafood)

·         Baby food (up 7.9%)

·         Sodas and other carbonated drinks (7.4%)

 In a Battle for Share of Stomach

Are you Year over Year Customer Counts UP? 

Full-service restaurant prices rose 6.6% as food-away-from-home inflation hit a 40-year high. Fast-food menu price soared 8% in December, according to new federal data released recently, as the industry continues to pass on higher costs for food and labor onto customers.

Prices for full-service menu items were not far behind, according to the U.S. Bureau of Labor Statistics, rising 6.6% annually. Overall, food-away-from-home inflation rose 0.6% monthly in December and 6% annually, the largest increase for the index since 1982.

CEO’s of restaurant chains have been touting top line sales numbers as a ‘success’ platform.  We won’t disagree with that except to say year over year customer count declines are creating a huge opportunity for non-traditional fresh food operators to garner your customers.  Consumers are dynamic not static and no matter haw hard a food retailer works if you are losing more customers than you are garnering you not in a good place.

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company edify your brand with relevance.  Call 253-759-7869 for more information.