What’s for Dinner? If
how much you pay for dinner is a consideration, then there you shop for food
matters. It is at the intersection of
how much dinner cost and convenience that consumers make the choice on where to
get dinner according to Steven Johnson Grocerant Guru® at Tacoma, WA
based Foodservice Solutions®.
That said, There was an old formula for the
price, value, service success was: Price + Quality + Service +
Portability = Value, and it was at that intersection the consumers spent
more money freely.
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-Flavors + Social + Fresh
Prepared +Portability = Value. Here is some good news; November marked the eighth
consecutive month of decelerating menu prices. Watch for consumers to spend
more this month at restaurants. Life is
just that simple.
The Consumer Price Index for November
showed a 3.1% increase year-over-year, down a tick from the 3.2% pace in
October, according
to a Bureau of Labor Statistics report released
last week.
Here this is important, food prices, both
at home and at restaurants, decelerated on the month. Food-at-home prices,
including grocery stores and supermarkets, rose by 1.7% month-over-month
(versus 2.1% in October) and 2.9% year-over-year and continued to trend down at
a faster rate than restaurants. The pace of inflation for the
grocery/supermarket category has now fallen below the Federal Reserve’s 2%
target rate. Note: that is a one month number and consumers know that they are
paying about 18% - 20% more than they were in 2019. That is where the mind-set problem lies with
the consumer so be careful in how you message menu price information to them
and with them.
Now then, menu prices, meanwhile, were up
5.3% year-over-year – versus 5.4% in October – and rose 0.4% in November,
consistent with its month-over-month increases in October and September.
Full-service meals rose 0.5%, while the index for limited-service meals increased
0.4% over the month. On the year, limited-service meals increased 6%, while the
index for full-service meals rose 4.3% year-over-year. November marked the
eighth consecutive month of decelerating menu prices.
Despite the widening gap between the
grocery/supermarket category and restaurants, and some erosion
in restaurant traffic, Mark
Kalinowski, president and CEO of Kalinowski Equity Research, is confident that
restaurants will continue to take share from grocery. This year, for instance,
restaurants gained 150 basis points of market share from the grocery sector,
and he expects another 50-to-100 basis points next year, barring a recession.
“Consumers may complain a lot about
higher prices, but their actions speak louder than words,” he said during a
recent interview. “Americans have shown they want restaurants to be a big part
of their lives.”
That said, he notes the consumer is
becoming more guarded and expects “meaningfully less pricing” taken in 2024. So,
if you want to get a bump in sales, put something on sale this year.
Matthew Shay, president and CEO of
the National
Retail Federation (NRF), also noted
last week that consumers are balancing caution and optimism. “November
Retail Monitor data shows that consumers are embracing the holiday season and
promotions being offered by retailers,” he remarked. “Value conscious shoppers
are out looking for deals as they purchase gifts for family and friends, and
this data indicates that they’re finding them. Since November makes up half the
holiday season, these numbers are a positive indication of what we can expect
for the full holiday season.”
Are you trapped doing what you
have always done and doing the same way?
Interested
in learning how Foodservice Solutions Five P’s of Food Marketing can edify your
retail food brand while creating a platform for consumer convenient
meal participation, differentiation and
individualization? Email us at: Steve@FoodserviceSolutions.us
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