As consumers increasingly feel the impacts of rising food prices, many are beginning to make the shift from dining out to eating at home.
On a call with analysts Wednesday (June 29) discussing the company’s fourth-quarter fiscal year 2022 earnings, General Mills CEO Jeff Harmening noted that the company is seeing the emergence of changes in how consumers are getting their food needs met.
“When we saw this in the last recession, the Great Recession, we saw that consumption of away-from-home eating was down and replaced by at-home eating,” he said. “We’re seeing the same kind of behavior starting now, … and that’s because customers want to get out more, but the cost of eating away from home is more than double the cost of eating at home.
The fact that the consumer-packaged goods (CPG) giant is noticing this shift is especially notable in light of the different inflation rates across different categories. The Consumer Price Index for All Urban Consumers (CPI-U), reported by the U.S. Bureau of Labor Statistics (BLS) earlier this month revealed that while food prices overall rose 10.1% year over year in May, and food at home (i.e., grocery) prices increased 11.9%, food away from home (i.e., restaurant) prices only grew 7.4%.
Still, with price increases for all items reaching 8.6%, it would appear that consumers are saving where they can, especially given that many are not in a place to be splurging on premium dining experiences. Research from PYMNTS’ May study “New Reality Check: The Paycheck-to-Paycheck Report – The High Earners Edition,” created in collaboration with LendingClub, found that 61% of consumers live paycheck to paycheck, and of those, about a third do so with difficulty.
As consumers’ price anxieties rise, many retailers are noticing a shift to private-label brands, a trend that could compromise the performance of national brands such as those in General Mills’ portfolio. Grocers ranging from Kroger to Walmart to Target have noted the change on recent company earnings calls. However, Harmening said grocery shoppers’ resistance to change would soften the impact of this shift.
“Of course there’s value seeking behaviors once [shoppers] get in the store, but consumers try to change their habits as little as possible and still be able to get what they want,” he said.
Still, PYMNTS research revealed that consumers are making changes when it comes to the products they choose. Findings from the May U.S. edition of PYMNTS’ Digital Economy Payments study, “Digital Economy Payments: How Consumers Pay in the Digital World,” revealed that consumers’ average spending on their grocery purchases fell between March and April even as food prices themselves continued to rise.
Specifically, the study, which drew from a census-balanced survey of more than 3,000 U.S. consumers in April, found that shoppers spent $95 on average for their last grocery purchase in April, a decrease from $110 in March. This trend suggested that consumers are likely switching to lower-priced brands or products.