Inflation in the United States continues to influence consumer behavior despite being significantly lower than it was during its peak in 2022. This may be because food-away-from-home (FAFH) inflation, specifically, continues to outpace overall inflation. In May of 2024, the Bureau of Labor Statistics reported overall inflation at 3.3%, with FAFH at 4.0%—down from 5.0% in January 2024, yet still higher than overall inflation rates.
The resulting increases in cost of living and menu prices are pushing consumers and operators to change their attitudes and behaviors. For operators in this dynamic economic environment, understanding food and beverage spending habits, preferences, and value decisions is vital.
The IFMA Consumer Planning Program, in partnership with Datassential, completed a survey of 1,503 consumers and 403 operators during Q1 2024 to examine consumer spending decisions.
Key facts and figures
- The USDA projects that Americans spend nearly a third (29%) of their food and beverage budget away from home.
- Regardless of tighter budgets, away-from-home spending continues to rise in 2024, reaching 42% growth versus last year.
- 85% of consumers order value items frequently or occasionally.
- 60% of operators cite rising utilities, rent and taxes as challenges.
Key takeaways
Away-from-home spending rises alongside menu prices. While this is in line with IFMA’s 2023 Big Report, it is still down from what was anticipated by the USDA’s 2022 away-from-home food estimate. Actual spending has not caught up with anticipated increases.
Millennials and Gen X are key consumer demographics since they spend the most on food and beverage, including away-from-home. Although consumers are tightening their budgets, younger consumers are likely to use creative cost-saving measures that don’t sacrifice the dining experience.
Operators looking to target millennials and Gen X consumers can offer:
- Value menus
- Combo, BOGO and add-on deals
- Limited time offers (LTOs)
- Loyalty programs
- In-app promotions and deals
Gen Z is a key demographic to watch. While their purchasing power isn’t as high as older generations, their proportion of spending away-from-home is higher than other generations. As they gain more buying power, they’ll become a more important target. Additionally, this generation is more likely to substitute their order for a lower-cost item, while older generations, including Boomers, are more likely to skip dining out altogether if menu prices are too high.
Operators are struggling with higher overhead costs, a decrease in traffic and smaller orders. Manufacturers can support them by providing product substitutions that can manage costs, inventory, labor and shelf-life.
Manufactures can also help operators by:
- Offering a variety of case sizes to help with inventory management
- Providing labor-saving solutions with speed-scratch items
- Help extend shelf-life with frozen and shelf-stable items.
Consumers and operators are equally affected by cost-of-living increases, and both require innovative solutions for addressing price concerns.
On the consumer side, offering real value through special deals and loyalty programs shows promise at getting them in the door. The opportunity for manufacturers is to offer operators actionable solutions to inventory, labor and food waste.
For additional information relating to this topic, check out these helpful resources:
- How You Can Make Margin Improvements that Improve Your Bottom Line
- Webinar Recording: The Definition of Value: A Consumer and Operator Point of View
IFMA developed the Consumer Spending and Value report in partnership with our research partner, Datassential as part of the ongoing Consumer Planning Program (CPP).
The program’s goal is to better understand consumer and operator behavior and what manufacturers can do to influence decision-making. To learn more and to engage with the rest of the food-away-from-home ecosystem, visit the IFMA website.
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This post is sponsored by IFMA
