As consumers increasingly feel the effects of rising food prices, many are beginning to switch from restaurants to dining at home.
In a call with analysts Wednesday, June 29 to discuss the company’s results for the fourth quarter of fiscal 2022, General Mills CEO Jeff Harmening noted that the company sees the emergence of changes in how consumers meet their food needs.
“When we saw this in the last recession, the Great Recession, we saw that out-of-home dining consumption had declined and was being replaced by at-home consumption,” he said. “We’re seeing the same kind of behavior from now on, … and it’s because customers want to go out more, but the cost of eating out is more than double the cost of eating at home.
The fact that the consumer packaged goods (CPG) giant is noticing this change is particularly notable in light of the different inflation rates in different categories. The consumer price index for all urban consumers (CPI-U), released by the U.S. Bureau of Labor Statistics (BLS) earlier this month, revealed that while food prices rose overall by 10.1% year over year in May, and food at home (i.e. grocery store prices) increased by 11.9%, food out of home prices (i.e. restaurants) grew only 7.4%.
Still, with price increases for all items reaching 8.6%, it looks like consumers are saving where they can, especially since many aren’t able to splurge on high-end dining experiences. range. Research from PYMNTS’ May study “New Reality Check: The Paycheck-to-Paycheck Report – The High Earners Edition,” created in conjunction with LendingClub, found that 61% of consumers live paycheck-to-paycheck pays, and among these, about a third do so with difficulty.
Read more: 36% of consumers who earn more than $250,000 are now living Paycheck to Paycheck
As consumer concerns about pricing grow, many retailers are noticing a shift toward house brands, a trend that could undermine the performance of national brands such as those in the General Mills portfolio. Grocers ranging from Kroger to Walmart to Target noted the change during recent company earnings calls. However, Harmening said grocery shoppers’ resistance to the change will lessen the impact of that change.
“Of course, there are value-seeking behaviors once [shoppers] walk into the store, but consumers try to change their habits as little as possible and still be able to get what they want,” he said.
Yet, PYMNTS research found that consumers are making changes when it comes to the products they choose. Results from the May U.S. edition of PYMNTS’ Digital Economy Payments Study, “Digital Economy Payments: How Consumers Pay in the Digital World,” found that average consumer spending for their grocery purchases fell between March and April, even as food prices themselves continued to decline. ascend.
See more : PYMNTS Data Shows Consumers Are Turning to Grocery Brands and Low-Cost Merchants
Specifically, the study, which draws on a census-balanced survey of more than 3,000 U.S. consumers in April, found that shoppers spent an average of $95 on their last grocery purchase in April. , down from March’s $110. This trend suggests that consumers are likely switching to cheaper brands or products.