Away-from-home F&B sales are growing as consumers ‘treat’ themselves
Coffee Shop Credit AdobeStock
Rising food prices may be a top concern for consumers, but that is not stopping them from drinking and dining out.
Despite cutting back on grocery spending, Chris Costagli, vp/food insights lead, Nielsen IQ, in his “Mastering Omnichannel Sales in the Coffee Industry” webinar for the National Coffee Association (NCA), said that foodservice excluding alcohol sales are expected to approach USD $1 trillion this year, adding that foodservice and drinking places are recapturing share of U.S. food sales. “The trend change was dramatic in 2020; driven by more frequent at-home cooking and panic-induced stockpiling. Foodservice and drinking place sales are recovering and projected to recapture the lead in 2026,” he said. (Costagli noted that inflation and high menu prices have contributed to large growth in foodservice; however, these macroeconomic conditions are causing the growth rate to slow.)
It seems that in today’s stressful climate, away-from-home consumption plays an important role in consumers’ mental wellbeing. Despite inflation, Costagli said that most consumers are going out to eat/drink as least as often as usual. Only a quarter of those who eat/drink out have scaled back on the frequency of visits. There are more consumers visiting more often than usual than there are scaling back. “They are more than places to eat and drink,” he explained, “they are vital gathering spots that foster friendship and connection.”
Nielsen IQ (NIQ) found that one-in-five consumers said they would be lost without bars or restaurants. As such, going out weekly is the norm. Per NIQ’s CGA May 2024 US On Premise Impact Report:
- 63% restaurant/bar visitors make at least one trip a week
- 77% plan to go out to eat in the next month
- 47% plan to go out for a drink in the next month
According to Costagli, ‘treating’ is the main reason for going out more. Of the 29% going out more often, treating and variety seeking are leading motivators:
- I have been treating myself 44%
- There are new places that I have wanted to try 35%
- There have been more events than usual 25%
- I want to support local business 23%
- I have been able to save money recently 21%
- I am visiting while I have enough disposable income 19%
‘Away-from-home coffee’ is already considered an ‘affordable indulgence’ so these latest dining out trends bode well for coffee shops and cafés. At one of his NCA Convention presentations (it may have been the virtual convention in 2022 or the 2023 one in Tampa) Matthew Barry, senior beverages insights manager, at Euromonitor International, spoke about the emergence of two types of coffee shops following the Covid-19 pandemic: those offering convenience (speed, mobile orders, etc.) and those offering an experience.
If one of the primary reasons consumers are drinking and dining out is because these places help “foster friendship and connection,” then those coffee shops favouring ‘experience’ over ‘convenience’ have a real opportunity to solidify their establishment as a ‘go to gathering place’ and attract more consumers by elevating or enhancing their in-store experience, through ambiance, menu options, and of course, customer service.
