Wednesday, March 22, 2023

Grocery Stores and Restaurants Continue Battling for Share of Stomach


In the continuing battle for share of stomach the consumer continues to migrate with the food price, value, service equilibrium according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

The formula for the price, value, service equilibrium continues to evolve success was: 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.

Currently, price is top of mind for most consumers. That said Consumer Price Index for February indicated a narrowing of the gap between grocery and restaurant prices, the Bureau of Labor Statistics reported last week.

So, the index for food at home, mostly groceries, rose 10.2% over the last 12 months, and the index for food away from home, mostly restaurants, rose 8.4% over the past year. The index for full-service meals rose 8% over the last 12 months, and the index for limited-service meals rose 7.2% over the same period.

Mark Kalinowski of Kalinowski Equity Research, stated, “With grocery prices continuing to rise at a faster rate than restaurant prices, and with commodity-cost inflation remaining a huge challenge – coupled with what has been so far fairly manageable consumer resistance to menu price increases,” …“we expect that U.S. restaurants will continue to raise menu prices at a meaningfully higher-than-historical-average rate during the first half of 2023, if not for longer.”

Here is the good news for restaurants.  The Consumer Price Index data showed the gap between groceries and restaurants narrowed in February from January, when food at home rose 11.3% and food-away from home was up 8.2% in the past year.

Kalinowski added, “The 1.8 percentage-point difference between food-at-home’s 10.2% and food-away-from-home’s 8.4% nevertheless remains one of the widest gaps in 40-plus years... “However, on a monthly basis, it is 370 basis points less than the 5.5 percentage-point gap witnessed for July 2022 and August 2022. We expect the gap to continue to narrow over the next six to 12 months, meaning that the current advantage for restaurants is likely to dissipate in the not-so-distant future.”

Ron Ruggles of NRN reported, “Noah Hayes, general manager for the U.S. and Canada at Deliverect, a global software-as-a-service company for online food-delivery management, said in a statement:

“Inflation is dominating the conversation in every industry and according to the Bureau of Labor Statistics, consumer prices rose 6% for the year ending in February,” Hayes said. “With the food index increasing 0.4% over the month and 9.5% year over year, consumers have felt the impact.”

Consumers “undoubtedly” are increasing their consciousness of spending, he said, adding that restaurants can automate tasks and optimize menu pricing.

“While finding ways to boost profits and reduce costs will be imperative for the bottom line, restaurants should continue offering competitive wages to recruit and retain staff,” Hayes said. “A happy team and operationally savvy kitchen is the winning recipe when it comes to offering a high standard of service to customers.”

Consumers are time starved, looking for meal solutions.  They are looking for grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meals according to the team at Foodservice Solutions®.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: or 253-759-7869

In a Battle For Share of Stomach

You Can WIN!

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