At the intersection of Consumer Sentiment Index and continued declines in year over year restaurant visits the prospects for growth are dimming according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. “The continued customer migration from legacy chain restaurants to too new non-traditional points of fresh food distribution are elevating consumer choice leaving those unwilling to adapt at a disadvantage” according to Johnson.
There is no doubt that grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food continues to garner market share as consumers seek meals and meal components that are quick to obtain, fresh, and fast to prepared. Empowering personalized, customized, family meals.
So, the University of Michigan’s latest Consumer Sentiment Index recorded consumer sentiment in May at 58.4, a 10.4% drop from April’s 65.2 figure, putting it at virtually the same level of sentiment seen in March.
“This recent drop was largely driven by continued negative views on current buying conditions for houses and durables, as well as consumers’ future outlook for the economy, primarily due to concerns over inflation,” Surveys of Consumers Director Joanne Hsu said.
So, The NPD Group reported that there was a 4% decline in consumer visits to U.S. restaurants this April compared to a year ago. Factors that contributed to this decline include food inflation, rising costs and a 9% increase in the price of a foodservice meal compared to April 2019.
When you consider that restaurant traffic in April was 11% below the pre-pandemic level in April 2019. The 1% increase in consumer spending at restaurants in April versus a year ago was more a reflection of higher prices than increased use of restaurants, according to NPD’s daily tracking of the U.S. foodservice industry.
Note that, online and physical visits to quick-service restaurants (QSRs) declined by 4% in April compared to a year ago and is 6% below the April 2019 pre-pandemic baseline. Traffic to full-service restaurants (FSRs), which had the steepest declines during the pandemic, was down 3% this April compared to a year ago, which is 31% below April 2019 visits.
Here is the problem for consumers; rising restaurant prices have had the most impact on lower-income households and households with kids. For consumers in households with annual incomes under $50,000, their restaurant visits declined by 11% in April 2022 compared to the same month a year ago. Traffic from households with kids under age six was down 8% and decreased by 9% for households with kids ages six to 12 in April compared to a year ago. Visits from groups with kids, from the same home or not, were down 14% from a year ago, while traffic from adult-only groups was up 1% this April compared to April 2021.
The fact is business models from 1999, 2009, 2019 won’t work in 2022 or 2023. Without evolving with customer relevance year over year customer counts will continue to decline.
Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization? Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook, LinkedIn, or Twitter