ALEXANDRIA, VA — If we’ve learned anything over the past couple of years, it’s to expect the unexpected. So as prices rise and a recession looms, the future still seems hard to predict.
During the American Bakers Association’s NextGen Baker Leadership Forum, held April 26-28, JP Frossard, VP and consumer foods analyst for Rabobank, warned that although gas prices are skyrocketing and rent is going up, consumers have also become much more strategic in their spending.
Therefore, baking companies must be aware of consumer behavior because, recession or not, people are going to be selective about where they purchase baked goods — or meals that contain them.
As stay-home orders and mask mandates lifted across the country little by little, consumers dipped their toes back into foodservice establishments. After spending most of 2020 and the first part of 2021 replicating the restaurant experience at home, people were waiting with bated breath for permission to eat out again. In fact, even as COVID variants spiked surges in cases through 2021, fear of the virus in public places seemed to wane.
“Consumers reactivated a lot of their habits,” Frossard said. “They went back into restaurants and resumed traveling. They may not have been going overseas, but even if they were just driving somewhere, they were content to get out.”
Today, even as prices soar and the workforce plummets, eating out is still a favorite pastime; it just might look a little different these days.
“Consumers are still going out, but they may be a little choosier about where they’re going,” Frossard said. “People who have been going to fast-casual or similar casual dining can easily switch to QSR.”
“Consumers are still going out, but they may be a little choosier about where they’re going. People who have been going to fast-casual or similar casual dining can easily switch to QSR.” —JP Frossard | VP and consumer foods analyst | Rabobank
Outlets who can offer high quality at a lower price point with more efficient access will win the day. Frossard pointed to growth being experienced by discount stores over the high-end retailers.
“Specialty stores have lost share to regular supermarkets and also discounters that have improved their quality and brought in nicer brands and organic varieties,” he said.
Consumers are noticing, especially with baked goods. The at-home restaurant experience provided a baseline of expectations, and people have taken notice to quality in products like baked goods, whether on the shelf or in a dining experience.
“It’s brought a whole new respect from bakery consumers,” Frossard said. “They see the role of bakery and what it provides at home and in foodservice.”
While foodservice business overall is not back to pre-pandemic levels, limited- and quick-service are driving the growth. Bakery producers have an opportunity to tap into the at-home kitchen experimentation that happened in 2020 and use it for innovation.
