Can ready meals cash in on the downturn in restaurant trade?

Restaurant spending in the US is down, and marketing intelligence company CivicScience looked at why.

Anecdotally some have blamed grocery price deflation but others have debunked this as lower grocery prices would result in increased disposable income, which should give restaurant spending a lift.

Also, grocery suppliers are denying that grocery sales are up.

The number of restaurants has increased, especially small, local eateries, and these restaurants may not figure in the stats but this increase does not account for the overall decline.

CivicScience’s surveys indicate that three times as many consumers are spending less at quick service restaurants (QSRs) compared to those spending more.

Why are people spending less at QSRs?

Only 9% of people cited uncertainty regarding the upcoming election as a reason for reduced restaurant spending. Men and women were equally likely to say they were cutting back spending. Every age group is cutting back, with GenXers cutting back the most. Millennials were the most likely to say their spending has increased. Baby boomers were the most likely to say their spending is unchanged, but the least likely to say they are spending more. Blacks and Hispanics were more likely than average to say their spending has increased.

A bit of data mining revealed that 47% of regular QSR diners who have experienced increased health insurance costs over the past year have cut back their QSR spending at “least somewhat”, while 40% of those with unchanged health insurance costs said the same. The big difference, however, is among the group who said they are spending “much less” at QSRs. Those with higher health insurance costs are a full 30% more likely to say they are cutting back spending significantly.

As overall health insurance costs are expected to continue to rise, there’s reason to believe the downward trend for restaurants will also continue.

While ever consumers are forced to spend more on health care, it seems they will look for cheaper food options.

This means lower grocery bills and fewer meals at QSRs. The picture will continue to be muddied by the impact of meal kits, ready meals, home delivery services and the like. As consumers back away from full service restaurants to QSRs and from QSRs to DIY there is scope for innovative ready meal manufacturers to pick up the scraps, so to speak.