Conagra’s Frozen Food Sales Grow as Consumers Seek Cheaper Prepared Meals

With inflation-concerned consumers seeking less expensive alternatives for quick meals, Conagra’s frozen food sales are rising.

Packaged foods giant Conagra Brands, parent company of a wide range of well-known grocery brands including Reddi-wip, Slim Jim, Orville Redenbacher’s and more, noted in its third-quarter FY2023 earnings presentation Wednesday (April 5) that frozen food sales have been rising significantly in the last year. Frozen retail sales have been up mid-20s percentages relative to pre-pandemic in the recent quarter, and up mid-single digits year over year throughout the last year.

Single-serve frozen meals grew 6% year over year, showing increased demand for quick, convenient meal options that cost less than, say, ordering from a restaurant for delivery or pickup. Granted, it is not as if frozen meals are easy pickings for food brands, given the narrow margins.

“To be very profitable in frozen, you have to have scale, and we have been very deliberate over the last several years in continuing to build our scale in frozen,” CEO Sean Connolly told analysts on a call. “Because when you’ve got scale, you can drive that profit and that margin improvement, and if you’ve got the innovation program that wins with consumers, then you’ve got the trifecta.”

The company’s observations mirror those of another food giant, Campbell Soup Company, which noted last month that prepared meals have been performing well, with consumers no longer willing to spend hours each day cooking. Now, consumers are looking for ways to avoid doing that work without springing for a costly restaurant meal.

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.

Additionally, PYMNTS research from early on in this period of steep food inflation already showed an increase in demand for quick meal options at the grocery store, and that trend has only continued. Data from the study “Digital Economy Payments: Consumers Buy Into Food Bargains,” which drew from a July survey of nearly 2,700 U.S. consumers, revealed that 37% of consumers had 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.

In addition to the cost savings, consumers are also seeking out the convenience of purchasing prepared meals at the grocery store, enabling them to get all their food needs met in one place rather than having to add a trip to a restaurant. In an interview with PYMNTS, Geoff Alexander, CEO of fast-casual chain Wow Bao, spoke to this shift.

“The supermarket has really become where consumers get all their meals at home,” Alexander explained. “It’s not just dining out now in restaurants — grocery stores are finding different ways to keep people inside the store to find their next meal. Whether it’s prepared food counters or partnering with restaurants, they’re making additional opportunities for people to do one-stop shopping.”

Similarly, Atul Sood, chief business officer at Kitchen United, the ghost kitchen and virtual food hall company behind grocery giant Kroger’s in-store multi-brand pickup and delivery restaurants, spoke to PYMNTS about the demand for options at the supermarket that save consumers the time it takes to cook.

“What we had as an initial hypothesis was that when consumers do shopping for the week, they don’t necessarily want to cook that night,” Sood explained. “That seems to be really clicking with consumers. As soon as they get educated about the option of ordering from restaurants in a grocery store, that repeat orders tend to be very high and consumer retention tends to be very strong.”