In a new report from IRI and the NPD Group found that once again, “Food-at-home sales are surpassing those at restaurants. The pandemic, of course, sent most cubicle-dwellers to their home offices. The fact that many of those people are still working from home most of the time is apparently very good news for grocery stores.” Thus, winning by default.
The report found, “Food-at-home sales are outpacing restaurant sales, a trend that is expected to continue to grow. …Food-at-home sales have grown 8.7% compared to a year ago, while food-away-from-home sales are up 6% compared to 2021, the groups said in their first-ever assessment of the nearly $1.5 trillion total food market.
In case you did not know, Albertsons CEO Vivek Sankaran told analysts last month that his company has noted the shift from people working at home, with the grocer’s prepared meals, sandwiches and grab-and-go salads performing well.
“Consumers are still eating a lot at home, right?” Sankaran said. “Our ready meals are doing so well, we just launched a sandwich program. And the sandwich program, which is homemade sandwiches, they’re doing so well. And our convenient salads in our stores are doing so well.”
David Portalatin, SVP and industry advisor for food and foodservice for NPD, stated, “Consumers are seeking out less-expensive food options from grocery stores rather than dining out at restaurants, … “Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home,”
When shoppers hit the grocery store, they are increasingly hunting for low prices, the report said.
“Consumers are bargain hunting, preferring more mainstream and value brands over premium brands, choosing private-label foods in select categories and occasionally buying premium products as affordable luxuries,” the report noted.
There can be no doubt that as inflation hit every part of consumers daily life restaurants will face continued pressure keep prices low or risk capitulating year over year customer counts. Restaurant Year-over-year (YoY) same-store sales and traffic experienced the fifth consecutive month of negative growth. July’s sales growth was +0.6% — a slowdown of 1.3 percentage points compared to last month. Putting it into a longer historical perspective, this is the weakest growth posted by the industry since February 2021 — the last month in which the industry lapped over a pre-pandemic month.
Guest count growth rates face a similar and, frankly, more concerning circumstance. Same-store traffic experienced negative YoY growth for the five-month period ending in July 2022. Looking at traffic numbers from the first week of August, Black Box Intelligence expects the negative traffic growth trendline will continue its streak through the end of the month. Traffic growth was -5.1% in July — a decline of 0.4 percentage points compared to June’s growth rate. Like same-store sales, this was the softest traffic growth posted by the industry since February of last year.
“About 46% of restaurants lacked the funds to pay their August rents, an 8-point jump in delinquencies from two months earlier, according to the latest survey of small businesses by Alignable Research Center.
The research shows that rent became significantly more difficult for all types of small businesses to cover this month. The delinquency rate across all industries was 40%, the highest Alignable has clocked in 18 months. For July, the rate was 28%.
Restaurants had the highest delinquency among the service industries that were included in Alignable’s study. The report was based on a poll conducted between Aug. 13 and Aug. 23 of 7,331 randomly sampled small businesses.
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