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Pricing Gap Reported Between Retail and Foodservice Industries

Pricing Gap Reported Between Retail and Foodservice Industries


UNITED STATES
Tuesday, August 23rd, 2022

Inflation continues to be a driving factor behind shoppers’ spending decisions, and reports have shown that consumers are rethinking their food budgets. Consumers have been shown to opt for dining out in an effort to save more money.

The Wall Street Journal reported consumer prices at grocery stores and restaurants increased 13.1 percent and 7.6 percent, respectively, year-over-year in July. As noted by the Labor Department, this is the largest inflationary gap between grocery stores and restaurants since the 1970s.

Consumers in the U.S. are currently experiencing the steepest food inflation in more than four decades. The Labor Department also revealed that grocery costs have increased by 10 percent or more annually since March, with year-over-year prices rising across nearly all food categories.

With inflation and cost playing a constant factor in spending, consumers have leaned toward eating out in an effort to save more money as prices at grocery stores and restaurants increased 13.1 percent and 7.6 percent, respectively, year-over-year in July

The foodservice sector has also encountered pricing spikes this year. However, the source noted grocery prices are more affected by cost increases for raw ingredients than in restaurants, where labor is the bigger factor.

This changing landscape impacts the strategies of both retailers and foodservice operators. Studies show that more restaurant brands are highlighting prices, deals, and loyalty rewards in advertisements to continue attracting consumers, while grocers are implementing expanded services, such as Albertsons, which has been rolling out prepared meals at more locations to fill this need.

With changing behaviors and supply chain impacts continuing to affect both sectors, how will the landscape continue to shift? DMN will continue to keep a pulse on the wire.

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