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Consumers are eating out less and relying more on discount grocers while managing a rising cost of living, Bank of America analysts said.
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People are shifting from casual restaurants to fast-casual joints and, in some cases, meals out at gas stations, executives said.
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They’re also buying smaller packages of food, according to Kenneth Casey Keller CEO of B&G Foods, the group behind Crisco and Green Giant.
The economy is changing how Americans are eating.
Diners are moving meals from sit-down restaurants to fast-casual joints, according to executives at a range of a businesses, and taking more trips to value supermarkets. Data released this week by Bank of America, indicates that a rising cost of living is prompting Americans, especially lower-income consumers, to dine out less and look harder for grocery deals.
Discretionary spending, such as vacations and restaurant visits, has been down for about two years, Bank of America said. And sales at restaurants and bars fell 1.5% from January to February, according to Census Bureau data released this week.
Restaurants have noticed, executives said on recent earnings calls. Darden Restaurants (DRI), the company behind Olive Garden and LongHorn Steakhouse, said its casual concepts are serving fewer households making less than $50,000 a year. Diners are ordering fewer appetizers, beverages and desserts, according to Michael Spanos, CEO of Bloomin Brands (BLMN), parent company of Outback Steakhouse and Carrabba’s Italian Grill.
“We’re seeing some check management with, especially, those households [earning] under about $100,000,” Spanos said on an earnings call last month, according to a transcript from AlphaSense.
The push to save is benefiting Cava (CAVA), a fast-casual Mediterranean chain that believes it is drawing customers who are curtailing visits to casual dining spots, CEO Brett Schulman said on an earnings conference call last month.
Cava gets “folks trading down from a legacy casual dining experience and sharing a meal in our dining room,” as well as “trading up from traditional [quick-service restaurants] for $1 or $2 more,” Schulman said.
Casey’s General Store (CASY), which sells gas, snacks and prepared foods like pizza, stands to gain as shoppers look to spend less on meals, CEO Darren Rebelez said on an earnings call this month. Once in Casey’s, shoppers are eschewing candy, where prices are “very high,” in favor of baked goods, he said.
The change “is a little more affordable and still allows people to get that sweet indulgence that they’re looking for,” Rebelez said.
