Study: Consumers eat more at home, bargain grocery shop to offset rising costs

Marianne Wilson
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The typical away-from-home eating occasion costs 3.4 times more than in-home food sourced from retail.

Consumers are bargain hunting when grocery shopping and dining out to combat increased food costs.

That’s according to a report by Information Resources Inc. and The NPD Group, which recently merged. Consumers’ bargain-hunting behavior includes 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, the study noted, consumers trade down to more value foodservice outlets, such as quick service restaurants, as evidenced by the growth in average customer check versus menu prices.

The nearly $1.5 trillion at- and away-from-home food market is forecast to grow around 8% in 2022, with at-home food (8.7% sales growth versus a year ago) outpacing away-from-home (6% versus a year ago), according to IRI’s and NPD’s inaugural joint research. The research forecasts the “complete food” market to grow by 3% to 5% in 2023.

“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. Krishnakuman 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.”

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, include:

  • Inflation is more moderate for food away-from-home (7.6% versus a year ago) compared to food-at-home (13.1% versus a year ago), the typical away-from-home eating occasion still costs 3.4 times more than in-home food sourced from retail.
  • Hybrid and flexible work schedules enable up to 20 million U.S. workers 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.
  • 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.