New research confirms that consumers in the US are bargain hunting when grocery shopping, eating more meals at home, and cutting back on restaurant visits to offset rising food costs.
A report by the newly-merged IRI and NPD groups shows that the nearly $1.5trn at-and away-from-home food market in the country is forecast to grow around 8% in 2022. However, at-home food (8.7% sales growth versus a year ago) is expected to outpace away-from-home (6% versus a year ago).
Amid the current inflationary environment, other key findings from the IRI-NPD research identify what is driving spending shifts, how occasions at home are evolving, and the impact of rising prices. This includes:
- Hybrid and flexible work schedules enable up to 20 million workers in the US 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.
“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.”
David Portalatin, senior VP and industry advisor for Food and Foodservice for NPD, added: “Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home.
“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 flavours inspired by global and regional influences.”
