Three strikes and your out is the rule in Baseball. Within the restaurant sector has three big strikes that look to be getting the best of them. Consider first that wholesale food prices were up 6.7% year over year in October and should reach 7.0% by years end.
While still dubbed the service sector within the restaurant sector limited-service restaurants speed of service has dropped 13% year over year and at full service it’s down 3%. All the while on a two-year basis year over year restaurant industry sector overall customer traffic is down still 15%.
There is more bad news for the restaurant sector. Specifically, meal counts from in newly released research from Progressive Grocer “What’s Next for the Way America Eats.” The survey findings document shifts in behavior as well as evolving expectations and preferences of shoppers in relation to what, how and where meals are consumed, which included the following:
· Home cooking has gained ground. Slightly more than 40% of meals were made at home with at least one component from scratch, an uptick from the prior year. Prepared foods accounted for another 20% of meals.
· Consumers continued to cook at home more, because they enjoyed most of the meals they made (55%), they saved money (43%), and they tried new recipes and/or flavors (42%).
· Home cooking is better than restaurant food, according to 45% of respondents, while perceptions of restaurant quality and service have slipped as prices have increased.
· Convenience, taste, quality and cost-effectiveness were top reasons that consumers chose foodservice at retail. Nearly 60% said that it’s more affordable than restaurant food.
Battle for Share of Stomach
· Those who have shied away from foodservice at retail cited concerns about safe handling and preparation methods, as well as fatigue regarding the choices offered.
· The data showed 2.1 out of 10 meals were prepared foods, and the drivers of preference are a combination of grocers’ reliable strengths.
· Sixty-three percent said [foodservice-as-retail] is a convenient option. We also saw things like taste of food, quality of food, and the cost-effectiveness or affordability of prepared foods as commonly mentioned reasons why consumers like prepared foods.
· The survey asked consumers who said they are buying prepared foods more why they are doing so, and the top reason was affordability, with 59% saying it’s more affordable than restaurant food.
· Most consumers still generally prefer the quality of restaurant food to prepared foods, but we do see that 27% feel prepared foods are at least as good as or better than restaurant food.
The true key for any food retailer in 2022 will be price, value, service equilibrium success which was defined by the team at Foodservice Solutions® as: Price + Quality + Service + Portability = Value. That formula has evolved with Gen Z and Millennials today. Foodservice Solutions® Grocerant Guru® has once again retooled, reevaluated, calculated then evolved the formula and here is the new formula: Price + Quality + Social + Portability = Value. Here is the question you need to ask yourself. How high can you raise prices before your competitor has the advantage?
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.