Retail vs. foodservice: Who’s winning?

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Retail vs. foodservice: Who’s winning?

18 Oct 2023

Joanie Spencer

Since 2008, Joanie Spencer has covered the retail and wholesale sides of the baking industry.
Serving associations such as the American Society of Baking (ASB) and BEMA, Joanie is also in demand as an industry presenter on bakery operations and trends. She holds a bachelor’s degree in communication from Rockhurst University and a master’s degree in journalism from the University of Missouri.

When she’s not running or playing soccer, Joanie spends her time with her husband and 11-year-old son.

LENEXA, KS — Sure, consumers are feeling the pinch from inflation’s impact on food prices. But there are other pressures bearing down that are also affecting food choices, everything from rising gasoline prices to student loan repayment to changes to SNAP benefits.

“But people still have to eat,” said Anne-Marie Roerink, president of research firm 210 Analytics, in a food trends presentation during a special media event at Corbion’s headquarters in Lenexa, KS. “These pressures are causing a lot of changes, and what we’re seeing is a lot of the dollars sit in retail rather than in foodservice.”

In a nearly trillion-dollar food and beverage market, about 60% of all food and beverage dollars are going toward the retail side as opposed to 56% in 2019, according to data from Circana.

That said, Roerink pointed out that although dollars are migrating into retail, consumers are further modifying their spending habits.

According to 210 Analytics research, 93% of shoppers are applying some type of money-saving strategy when they shop.

“When we look at sales and specials, they aren’t what they used to be, in terms of depth,” Roerink said. “We’re not seeing the depth of the discount, so people are still paying more even though something’s on sale. So, what people are left with is buying less or stretching that meal dollar as much as possible.”

One important strategy — aside from an increased focus on cooking at home — is controlling waste. When people are focused on not letting food go to waste at home, it will ultimately result in fewer unit sales, according to Roerink.

The good news is that while unit pressure hits frozen foods and higher ticket items like seafood, Roerink noted that the bakery category is seeing much less unit pressure.

In looking at total store, unit sales vs. a year ago are down by nearly 3%. And while every category is down in unit sales vs. a year ago, bakery only experienced a 1.9% drop in unit sales, the second smallest, only behind produce at 0.5% decline vs. a year ago.

“It’s about money well spent versus money well saved.” — Anne-Marie Roerink | president | 210 Analytics

With unit sales down and dollar sales up in nearly every category, it’s important to understand how people spend.

“It’s about money well spent versus money well saved,” she said.

That’s one reason foodservice has lost a bit of the share. Eating out has become less of a habit and more of a treat for consumers. And when they do eat out, the strategy has changed.

“People are pulling back on their restaurant dollars, and it’s becoming a more planned occasion to eat out,” Roerink said. “People find a restaurant that matches their budget, and then they might pull back their main entrée or spend a little less on dessert, alcohol or appetizers.”

One of the biggest shifts, though, is turning the restaurant habit into the grocery trip. Roerink described one shopper who walked through the store, imagining what she’d order from a restaurant menu and picking out those items to make at home.

In many cases, supermarkets are taking on foodservice with direct messaging for meal kits or components. Other strategies include outlining the cost-per-meal breakdown on in-store signage, allowing consumers to make direct comparisons.

However, Roerink predicted that the future might look a little more like a hybrid.

“What we’re really going to see over the next couple of years is a blurring between in-house and out-of-house dining,” she said. “Look at the amount of people who do takeout and delivery … and then add to that the fact that many of them add storebought items to their takeout.”

That blurred line might look like will be purchasing a sandwich or burger from foodservice carryout, supplemented with chips, drinks and desserts at home.

“Think about the opportunity that retail has there,” Roerink said. “In terms of blending with foodservice, every department around the store has an opportunity to add to a restaurant-based meal.”

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