KANSAS CITY, MO — Budget-minded consumers with bank accounts that have been affected by tariffs, inflation and the government shutdown are seeking “innovative value” and moving away from QSRs toward value grocers, dollar stores, c-stores and warehouse.
“Those are the four categories that are putting pressure on QSR for lower- to middle-income consumers,” said R.J. Hottovy, head of analytic research for Placer.ai, during the recent Q4 Crunch Time: Foodservice Foot Traffic & Trend Insights webinar hosted by The Food Institute. “Food-forward convenience stores such as Buckee’s, Wawa, Sheetz, QuikTrip and Casey’s — the ones that have really invested in the food program, mobile ordering, delivery and drive-thru windows — are taking the baton from QSR and taking leadership roles in terms of innovation while doing it with competitive pricing.”
Hottovy said Placer.ai data shows that middle- to upper-income consumers — the core of fast-casual dining — are also pulling back on their visit frequency and/or looking for less expensive alternatives, often turning to other channels.
Private label drives product innovation
Price sensitivity is driving this shift from food-away-from-home toward food-at-home, and it’s creating opportunities for bakeries in grocery stores, c-stores and other channels.
“We’re starting to see a pickup in fresh and specialty format grocers such as Sprouts, Whole Foods and Fresh Market,” Hottovy said. “Our data shows a pickup at lunchtime, with a big uptake at specialty grocers among stay-at-home workers. That’s a trend that’s become a story over the last three to four months.”
Grocery sales are up, with private label taking most of the share. One big reason for the rise in popularity of value grocers, aside from the stable price points, is the number of new product launches.
“With private label, you can move a lot faster sometimes in terms of product innovation,” Hottovy said. “With that flexibility to come up with a new flavor or a different type of SKU, it’s a combination of private label pricing and product innovation. That’s where a lot of the excitement in the category is happening.”
