To offset rising food costs, consumers are bargain hunting when grocery shopping, eating more meals at home and cutting back on restaurant visits, reports IRI and The NPD Group, which recently merged to create a leading global technology, analytics and data provider.
The nearly $1.5 trillion at- and away-from-home food market is forecast to grow around 8 percent in 2022, with at-home food (8.7 percent sales growth versus a year ago) outpacing away-from-home (6 percent versus a year ago), according to IRI’s and NPD’s inaugural joint research.
“With inflation hitting 8.5 percent 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 Krishnakumar 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 research offers the first comprehensive view of the Complete Food market, examining how consumers buy and consume food at home, use restaurants and foodservice outlets and uncovers new insights about consumers’ trade-offs to save money and splurge in the current inflationary environment. The research forecasts the Complete Food market to grow by 3-5 percent in 2023.
Other key findings from the IRI-NPD research identify what is driving shifts, how occasions at home are evolving and the impact of rising inflation, including:
- Hybrid and flexible work schedules enable up to 20 million U.S. workers to work from home, which keeps the majority – 62.5 percent – of the food dollar based on retail at-home sales, while 37.5 percent 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 percent 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.
“Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home,” said David Portalatin, SVP 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.”
For more information, visit iriworldwide.com.
