Photo credit: www.investopedia.com

Shifting Eating Habits Amid Economic Pressures

The dietary choices of Americans are undergoing significant transformations as rising living costs influence their spending behaviors. An analysis by Bank of America highlights that many consumers are dining out less frequently and are increasingly turning to discount grocery stores to manage their food budgets.

As economic pressures mount, patrons are transitioning from traditional sit-down restaurants toward fast-casual dining establishments. This trend is underscored by the growing number of visits to value-oriented supermarkets, especially among lower-income consumers who are seeking better deals on groceries.

Discretionary expenditures, including restaurant outings and vacations, have seen a downward trend over the past two years, as reported by Bank of America. Recent Census Bureau statistics revealed a 1.5% decline in sales at restaurants and bars from January to February.

Executives from major restaurant chains have taken note of these changing consumer habits. Darden Restaurants, the parent company of well-known brands like Olive Garden and LongHorn Steakhouse, reported that its casual dining venues are attracting fewer households that earn below $50,000 annually. Similarly, Michael Spanos, CEO of Bloomin Brands, observed that customers are opting for fewer appetizers, desserts, and beverages when they do choose to eat out.

Spanos emphasized that households, particularly those earning under $100,000, are carefully managing their spending decisions regarding dining options.

Fast-Casual Chains and Convenience Stores Thrive

Amidst the shifting dining landscape, fast-casual establishments such as Cava, a Mediterranean-inspired chain, are witnessing an influx of customers who are cutting back on more traditional casual dining experiences. CEO Brett Schulman noted that Cava is attracting individuals who are willing to spend slightly more than at typical fast-food outlets.

Gas station eateries like Casey’s General Store are also benefiting from this transition. CEO Darren Rebelez remarked that consumers are increasingly opting for affordable meal solutions, spending less than they would at full-service restaurants. Once in-store, customers are gravitating toward baked goods rather than pricier candy selections.

This shift in consumer preference reflects a desire for affordable indulgent options while still maintaining some level of dining satisfaction, according to Rebelez.

Trends in Grocery Shopping

Moreover, grocery shopping patterns are evolving in response to economic pressures. Sprouts Farmers Market, which typically caters to a higher-income demographic, anticipates an uptick in consumers choosing to prepare meals at home rather than dining out, as articulated by CFO Curtis Valentine.

Bank of America’s findings reveal that spending at discount grocery stores increased by 1.2% from February 2024 to early 2025, while premium supermarkets experienced a decline of 1.4%. This signals a significant shift as families turn their attention to more budget-friendly shopping options.

In addition, customers are increasingly opting for smaller food package sizes as a strategy to manage their grocery bills more effectively. Kenneth Casey Keller, CEO of B&G Foods, highlighted this trend, noting the importance of emphasizing smaller product sizes that cater to budget-conscious consumers.

Source
www.investopedia.com