Red Lobster has launched a line of frozen meals as consumers rethink their restaurant spending amid inflation.
The casual dining chain, which has more than 700 locations across six countries, announced Tuesday (Feb. 21) the debut of its first line of frozen seafood products, including biscuits, cod and shrimp, under the name “Red Lobster at Home.” The items are available at Walmart and BJ’s Wholesale Club locations.
Certainly, now is a good time for restaurants to be getting into the retail space, as consumers, amid inflation, seek more affordable alternatives to dining out and ordering in. According to data from PYMNTS’ study “Digital Economy Payments: Consumers Buy Into Food Bargains,” which drew from a July survey of nearly 2,700 U.S. consumers, found that 37% of consumers bought prepared food on their most recent grocery trip, up 7 points from the 30% of consumers who had done so back in November 2021.
Since then, inflation has only continued to rise, suggesting that the share would be even higher today, especially as consumers seek alternatives for occasions they would have previously purchased from a restaurant. PYMNTS’ report “The 2022 Restaurant Digital Divide: Restaurant Customers React To Rising Costs, Declining Service,” for which we surveyed more than 2,300 restaurant customers in December, reveals that the vast majority have made changes to their dining spending in response to inflation.
Anywhere from 67% to 88% of diners, depending on generation, have done so, with the most popular change cited being purchasing from restaurants less often.
Plus, findings from PYMNTS’ recent study “Changes in Grocery Shopping Habits and Perception,” for which we surveyed more than 2,400 U.S. consumers in late December, reveal that about one in 10 consumers have been purchasing more frozen meals from the grocery store amid inflation, a greater share than said the same of groceries on average. (Meanwhile, the share purchasing fewer of these items in the face of inflation was roughly in line with the cross-item average.)
Indeed, retailers see increased demand for premade meals. For instance, Walmart announced Tuesday in its fourth-quarter earnings presentation that its membership-only retail warehouse club subsidiary Sam’s Club saw double-digit perishable sales increases, with strength in prepared foods.
Moreover, launching retail products can allow restaurants to keep their brands relevant even when consumers are not dining out, driving awareness at the grocery store and building loyalty.
Red Lobster is not the only major casual dining chain looking to seize on consumers’ shift to grocery with new retail products. Days earlier, it was announced that IHOP is getting into grocery with the launch of packaged coffee. Food and beverage giant Kraft Heinz shared in prepared remarks accompanying its earnings release that it is launching a line of retail products in partnership with the breakfast chain.
“We are excited to announce a new multi-year partnership with IHOP,” Kraft Heinz CEO Miguel Patricio said. “In April, we’ll launch IHOP-branded coffee in retail — leveraging the scale and capabilities of our existing coffee business, and partnering with a fan favorite brand like IHOP, to reach new consumers.”