Home IRI/NPD Study: Inflation Forcing Consumers to Rethink Food Choices
August 26, 2022
IRI/NPD Study: Inflation Forcing Consumers to Rethink Food Choices
IRI Study: Gen Z Growing Marketplace Influence

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When it comes to dollars and cents, and inflation, eating at home is the less expensive option and one more consumers are preferring, according to a study by the recently merged Information Resources, Inc. and The NPD Group, which provides some evidence that merchandise in support of eating at home will remain in demand.

Despite recent weaker sales for home decor and housewares merchandise at some retailers, the summer has seen continued strength in outdoor products, suggesting that eating at home remains popular with consumers even if that means, when it comes down to cases, eating just outside the home.

In the IRI/NPD study, inflation came in as more moderate in food away-from-home, at 7.6% versus a year ago, compared to food-at-home, at 13.1% versus a year ago. Yet, the typical food service occasion still costs 3.4 times more than domestic dining on food sourced from retail. So, it shouldn’t be surprising that consumers are leaning toward in-home meals in an economic environment where costs are pressuring households, IRI/NPD stated.

The almost $1.5 trillion at- and away-from-home food market is set to grow at an 8% rate in 2022. IRI/NPD anticipates 8.7% food-at-home sales growth year over year outpacing 6% away-from-home 6% sales growth, according to IRI and NPD’s inaugural joint research, which provides the first-ever comprehensive view of the Complete Food market. The merged company is using the joint research capabilities of the combined operation to examine how shoppers buy and consume food at home and use restaurants and foodservice outlets with the goal of uncovering new insights about consumer trade-offs as they look to save money and splurge in the current inflationary environment, according to the firm. The research forecasts Complete Food market growth of 3 to 5% in 2023.

In the current economic circumstances, a variety of trends are affecting consumer food spending as IRI/NPD observed:

  • Hybrid and flexible work schedules enable up to 20 million workers to labor from home, which helps keep the substantial majority, 62.5%, of the food dollar coming from retail sales for the at-home dining market, with 37.5% going to food service spending.
  • Consumers are bargain hunting, preferring more mainstream and value brands over premium banners, choosing private label foods in select categories and occasionally buying premium items as affordable luxuries.
  • As costs have risen, consumers have migrated to more at-home food purchasing as demonstrated by a deceleration in foodservice traffic, which slipped by 3% in July.
  • Even when dining out, many consumers have traded down to value food service outlets such as quick service restaurants, as indicated by the growth in average customer check versus menu prices.
  • Market bifurcation has intensified as higher-income households lean toward premium products and lower-income shoppers focus on mainstream and value products, with growth increasingly driven by higher-income households as compared with more economically challenged lower-income households.

“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, in announcing the study results. “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, NPD senior vice president and industry advisor for food and food service, said, “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 flavors inspired by global and regional influences.”

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