Friday, September 9, 2022

Conundrum Eating-Out or Eating-In


Grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food continues to drive Top-line sales, bottom-line profits, and returning customer in every sector of retail foodservice today according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Consumers don’t want to cook from scratch, nor do they want to spend a hour walking through a grocery store looking for six items to make two meals as they are trying to save money according to Johnson. Here are some interesting numbers from The NPD Group on the price of meals:

·         At-home food (8.7% sales growth versus year ago) is outpacing away-from-home food (6% versus year ago)

·         While inflation is more moderate for food away-from-home (7.1% versus year ago) compared to food at-home (10.3% versus year ago), away-from-home food still costs 3.4 times more than at-home food)

·         Up to 20% of U.S. workers work from home, which keeps 62.5% of the food dollar based on retail at-home sales, while 37.5% is based on away-from-home sales

Let’s talk; that information tells us your restaurant meal must be 3.4 times better in some form. It might flavor, no cooking, no cleaning the dishes, time saving and or even simply fun.  Restaurant meals must become a better alternative than cooking a meal at home.

A recent price index study conducted by FreshRealm found that meals are up by wallet-shattering percentages year over year. The price index evaluated the places consumers shop for meals out of home — fast food, quick service, and table service. The index showed that for example, at McDonald’s, the Big Mac that was $5.29 last summer now costs $7.39 (and that’s without fries) while in some cities, the price of a Steak Burrito Bowl at Chipotle jumped from $8.95 to $12.70 between 2021 and 2022. Outside of drive-thru and fast casual, the cost of Red Lobster’s Wild Caught Snow Crab Legs rose from $22.99 in 2021 to a whopping $39.99 this year.

Consumers Get Creative

Consumers are not immune to these rising costs – and they are already on the hunt for viable new ways to navigate inflationary prices. According to a recent CNBC report, second quarter reports from McDonald’s and Chipotle confirmed that customers squeezed by inflation are opting for cheaper menu items and visiting both restaurants less overall. And when it comes to traditional restaurants, consumers reported similar levels of spending at restaurants in June 2022 compared to June 2021 amid signs of slowing growth according to Morning Consult’s 2H 2022 The State of Food and Beverage report.

As consumers look to lower their food costs, they have been replacing trips to restaurants with trips to the grocery store. Leading to the growth of the “hybrid meal,” where consumers are making meals by cooking some items from scratch, and some items are either semi-prepared or fully prepared, according to IRI’s Fresh Pulse podcast.

Dining Out at Your Grocery Store

Fresh prepared high-quality meals at retail present a great value for consumers in both single serve and family formats. According to the FreshRealm price index study, fresh prepared meals at grocery retail range from $6.99 - $9.99 for a single serving meal and family meals that serve 4+ range from $5.00 - $6.00 per serving. FreshRealm’s recently launched branded meal portfolio, Kitchen Table, includes delicious, chef-tested microwave-ready and oven-ready meals including Wild Caught Everything Spice Salmon, Alfredo Truffle Cavatappi with Spinach, and Family Meals that include Butter Chicken with Turmeric Rice and Cheese Enchiladas with Rice and Beans.

Now according to NPD, dwindling sales and declining foot traffic for restaurants are translating to a boost for supermarkets, with consumers who increasingly turn to bargain grocery shopping and eating more meals at home, according to new data.

Despite the fact that inflation is more moderate for food away-from-home (7.6% versus a year ago) compared to food-at-home (13.1% versus a year ago), the typical away-from-home eating occasion still costs 3.4 times more than in-home food sourced from retail, according to data from recently-merged companies Information Resources, Inc. and The NPD Group. The result, according to the data, is more people choosing to grocery shop and make meals at home. 

So, the nearly $1.5 trillion at- and away-from-home food market is forecast to grow around 8% in 2022, with at-home food (8.7% sales growth versus a year ago) outpacing away-from-home (6% versus a year ago), according to the research by NPD. 

 Here are some other key NPD findings include:

·         Hybrid and flexible work schedules allow some 20 million U.S. workers to work from home, which keeps the substantial majority – 62.5% – of the food dollar based on retail at-home sales, while 37.5% represents foodservice spending​​​​​​

·         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

·         Consumers are migrating to more at-home food to offset rising costs, as noted by the deceleration in foodservice traffic, down 3% in July. Even when dining out, consumers trade down to more value foodservice outlets, like quick service restaurants, as evidenced by the growth in average customer check versus menu prices

·         Market bifurcation intensifies as higher-income households prefer premium products and lower-income shoppers prefer mainstream and value products. More growth is driven by higher-income households, as lower-income households are more economically challenged

How and where are you selling meals?  If you are a restaurant owner, are you bunding meals to go for more than one meal occasion? If no, it just might be time to call the team at Foodservice Solutions®.

For international corporate presentations, regional chain presentations, educational forums, or keynotes contact: Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions.  His extensive experience as a multi-unit restaurant operator, consultant, brand / product positioning expert, and public speaking will leave success clues for all. For more information visit, FoodserviceSolutions.US or call 1-253-759-7869

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