Inflationary prices are causing consumers to eat more meals at home and choose lower-priced out-of-home dining options.
With inflation continuing to grow at record rates, more consumers are choosing to bargain grocery shop, eat meals at home and cut back on eating out, according to the first joint report from recently merged IRI and The NPD Group. Indeed, the at-home food market is expected to grow 8.7% in 2022 year over year, while away-from-home food will likely grow only 6% over the same time period.
The report also found that inflation for food away from home is 7.6% versus a year ago, while the rate for at-home food is 13.1%. Although that is the case, the typical away-from-home eating occasion still costs 3.4 times more than in-home food purchased at retail.
As such, more consumers are choosing value foodservice outlets such as quick service restaurants, as evidenced by the growth in average customer check versus menu prices. Consumers are also increasingly bargain hunting at the supermarket and leaning more heavily on mainstream and value brands instead of premium brands, while also choosing private label products in certain categories.
“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 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.”
IRI and NPD also found that inflation is hitting lower-income households particularly hard, with households making less than $75,000 annually eating 89% of their meals and snacks at home. These consumers tend to purchase more frozen and shelf-stable foods and use less expensive and private label brands, especially single-serve frozen meals and canned pasta.
"High food prices affect all consumers, particularly lower-income households," said David Portalatin, NPD food industry advisor. "Our research shows that households with incomes under $75,000 represent 46% of the U.S. population. These households are a critical demographic for food manufacturers, grocers, and foodservice operators to understand and know how they manage their food spending."