Inflation trims consumer restaurant visits, fuels grocery bargain-hunting

Consumers eating more meals at home despite lower inflation hikes in away-from-home food

Inflation-driven increases in food away-from-home have been nearly six percentage points below food-at-home purchases (7.6% versus 13.1%); however that has not swayed the typical consumer to increase restaurant visits. Food at home is still 3.4 times more than an in-home meal sourced from retail, note Information Resources, Inc. (IRI) and The NPD Group (NPD).

IRI and The NPD Group found that consumers are responding to rising prices by bargain hunting when grocery shopping. Moreover, they are eating more meals at home and cutting back on restaurant visits. The two firms recently merged, creating a more robust global technology, analytics and data provider, they announced.

“With inflation hitting 8.5% in July, it’s no surprise that consumers are trading down to lower-priced options and opting for more value, especially when dining out,” said Dr. Krishnakumar (KK) Davey, president of CPG and retail thought leadership for IRI and NPD. “While the pandemic and recent inflationary pressures shifted demand, restaurants and foodservice outlets offering value, convenience and at-home indulgence are top of mind for consumers and will continue to grow.”

The IRI-NPD research also identified more detailed preferences and consumer trends in response to rising inflation:

  • The 20M US workers that enjoy hybrid and flexible work schedules and work from home are keeping 62.5% of the food dollar based on retail-at-home purchases, and only 37.5% in foodservice spending
  • Also, consumers are bargain hunting, preferring more mainstream and value brands over premium brands, choosing private label foods in select categories. They occasionally buy premium products as “affordable luxuries.”
  • And to offset rising costs, consumers are transitioning to more at-home food, as suggested by the deceleration in foodservice traffic, down 3% in July. Even when dining out, consumers trade down to more value-based foodservice outlets, like quick-serve restaurants. This is evidenced by the growth in average customer check compared to menu prices.
  • Market bifurcation intensifies: 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.
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“Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home,” said David Portalatin, senior vice president and industry advisor for food and foodservice for The NPD Group. “As we head into 2023, restaurant recovery will be slow and steady, as traffic begins to return to pre-pandemic levels. Current demand suggests that culinary trends are shifting to incorporate more bold flavors inspired by global and regional influences.”

The data set comes from IRI’s retail point-of-sale data on what consumers purchase and where they shop, merged with NPD’s continuous following of at- and away-from-home eating behaviors. IRI and NPD completed their merger this month.

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