Foodservice
Foodservice Economics October 2023
In September 2023 we can see prices for fast food and sit-down meals went up a bit compared to last year. People are eating out less, and the overall restaurant business is facing challenges. The Technology Index (TI) shows that the industry's sales are going down, and there are many factors involved. Meanwhile, prices for groceries you buy to cook at home are changing too, and the differences in people's incomes affect how much they can spend on food.
INFLATION
Food away from home
INFLATION
Limited Service
INFLATION
Full Service
Foodservice
Share of Food
Bureau of Labor Statistics
Foodservice Economic Report
Food price inflation decreased in September as prices flattened for groceries and stayed high for restaurants, according to the Consumer Price Index (CPI).
CPI for the food-away-from-home index rose 0.4 percent in September 2023. The index for limited-service meals and the index for full-service meals also each increased 0.4 percent. The index for food away from home rose 6.0 percent over the last year. The index for limited-service meals rose 6.4 percent over the last 12 months, and the index for full-service meals rose 5.1 percent over the same period.
On the foodservice front, inflation is coming down but has held at high levels versus a year ago. Food-away-from-home was up 0.4% in September, higher than recent increases of 0.3% in August and 0.2% in July. Those numbers compared with upticks of 0.4% in June, 0.5% in May, 0.4% in April and 0.6% for March, February and January.
Year over year, pricing for food-away-from-home was up 6%—elevated, yet extending a mostly downward trend from 6.5% in August, 7.1% in July, 7.7% in June, 8.3% in May, 8.6% in April, 8.8% in March, 8.4% in February and 8.2% in January.
Circana Household Panel data reveals 80% of their panel utilized restaurants in the past few weeks by either dining at a restaurant, getting takeout, or ordering from a restaurant for home delivery. This was down 3 percent from August. Yet, foodservice continues to have a larger share of overall food sales than grocery.
The TIndex is Technomic’s first-look index on total foodservice industry performance reported monthly, comparing to the base year of 2019.
Each index number corresponds to the same month in 2019, where the index is assigned 100. Therefore, as an example, the January 2021 index of 82.2 suggests that the industry was 17.8% smaller in January 2021 than it was in January 2019.
The index is developed using several data sets available to Technomic post-month, including operator transaction, consumer visit tracking and distributor sales information. All data is weighted and evaluated to align with a representation of the total foodservice industry. The index is an advanced look at the market using this available data at the time of release. Final actual industry performance statistics published by Technomic later may not precisely align with the TIndex as more robust data becomes available hereafter.
The index includes inflation and is representative of sales change on a year-over-year basis for the given month. The index excludes the impact of the refreshment services and supermarket deli segments.
TIndex shows slowing growth in September.
The TIndex fell by 1.3 points to a 108.2 level in September vs. the August 2023 figure. Overall inflation levels continue to weaken in September (both from the perspective of menu prices and food costs) which, coupled with softness particularly in independent restaurants and the wider full-service restaurants segment, caused broader industry deceleration in overall sales.
On a year-over-year basis, the TIndex indicates that September 2023 foodservice sales grew by 1.8% (nominal) compared to September 2022. Adjusting for inflation, the industry declined by 3.7% on a real basis.
Retail
Overall food price inflation stayed below 2022 levels. The food-at-home index was up 2.4% annually in September, down from 3% in August as it continued its decline throughout 2023. According to CPI, the food index rose 0.2 percent in September, as it did in the previous two months.
The index for food at home increased 0.1 percent over the month, after rising 0.2 percent in August, according to CPI. Three of the six major grocery store food group indexes increased over the month. The index for meats, poultry, fish, and eggs rose 0.5 percent in September as the index for pork increased 1.6 percent.
The index for other food at home increased 0.3 percent over the month and the index for dairy and related products rose 0.1 percent. The index for cereals and bakery products decreased 0.4 percent in September, the first decline in that index since June 2021. The fruits and vegetables index was unchanged over the month.
Even as food inflation continues to decline, saving money and reducing expenditures are the main priorities for consumers over the next 12 months, according to Euromonitor International. The burden of the rising cost of living is not uniform across different income brackets due to spending priorities.
The poor experienced the fastest living cost increases during the 2018-2023 period because the essentials of food, housing and clothing absorb a disproportionately larger share of the household budget. In the U.S., over 2017-2022, real growth in household disposable income is 16.0% for higher income brackets, compared to 3.9% for the lowest income bracket.
Food cost inflation is a concern for 95% of shoppers, according to Circana Household Panel data, which is shown by 42% of shoppers plan to utilize leftovers more often, and 25% are actively looking for sales on protein options. In looking ahead at Thanksgiving, 34% will be looking out for deals and making spot purchases of specific items that go on sale or have coupons – but the other 76% will be harder to change from their typical store of choice just due to promotions.