You have to hand it to inflation-weary consumers: They maintain some perspective on their higher-than-it-used-to-be grocery spend—especially when they’re looking to justify acceptable indulgences.
With restaurant prices rising throughout 2022, too, most any made-at-home or grab-and-go meal or snack remained a bargain relative to its restaurant counterpart. That reality eased sticker shock somewhat for consumers who opted for the convenience of an $18 heat-and-eat pan of teriyaki chicken from a grocery refrigerated case rather than fast-casual takeout for their family on a given weeknight; it also made “soft splurges” in grocery more permissible for shoppers and a win for retailers.
Look at the humble sandwich, Parker advises. With U.S. consumers heading back to the office more often in 2022 and into 2023, more lunches are happening away from home. That may prime the pump for foodservice spend in forlorn business districts, but it’s not uncommon for a restaurant sandwich to cost $5 to $7 more than a made-at-home version, Parker notes—and for consumers continuing to contend with elevated inflation and economic uncertainty, that’s tough to swallow, often trumping the temptation to ditch the cubicle for a café. (To say nothing of the possible hassles of dealing with an understaffed restaurant.)
This doesn’t mean that consumers are toting PB&J or turkey on white from home every day to get their lunch spend as low as it can go, though. Rather, they’re saving a few bucks over the price of a restaurant lunch by splurging on grocery deli offerings.
As of October, the average per-trip spend on a deli-prepared sandwich at retail was $5.76, up 14% year over year, IRI found. That compares with an average spend of:
$6.89 on a restaurant sandwich (up 4% YoY)
$5.32 on a sandwich made with deli-sliced meats and cheeses and deli bread/rolls (up 14%), and
$3.69 on a sandwich made with packaged lunchmeat/cheese and center-store bread (up 14%)
The strongest growth across sandwiches, according to IRI, was in the two middle iterations: deli-prepared sandwiches and sandwiches made at home using deli-sliced proteins and fresh-baked (vs. center-store) breads.
Restaurant sandwich purchases fell in 2022, IRI reported, whereas purchases of higher-end, make-your-own sandwich fixings rose. A high-quality sandwich is a satisfying soft splurge for consumers, Parker indicated—cheaper than a restaurant version and made to their exact ingredient preferences, but more of a “treat” than something made just with processed packaged lunchmeats (which saw prices spike nearly 20% over 2021 levels anyhow).
Plus, with pre-packed, deli-sliced meats and cheeses, “You don’t have to wait in line; you don’t have to interact with the clerk,” Parker pointed out. That may not be a selling point for older shoppers, but it is for many Millennials and Gen Z consumers, who want to get in and get out and are happy to skip the conversation. “That’s (the option) having the fastest growth—(it’s) ‘I want to make it my own, but I don’t want the cheapest option,’” she said.
And what’s true in deli is true down the aisle in the regular meat department, too, Parker indicated: Even IRI’s own analysts were surprised in 2022 by “how much we heard within the industry, anecdotally, the importance of higher-end, quality meat cuts, even if [consumers] were of moderate to medium income.”
As Parker has made the point before, consumers aren’t just looking to combat inflation within the grocery store; they’re also still looking to manage their food spending across all channels where they buy food. And a splurge on a nice roast for a special gathering remained a more-affordable alternative to a special-occasion restaurant.
Dollar sales for fresh meat were up in December vs. the year-ago period, unsurprisingly, thanks to inflation’s price bump earlier in 2022, but volumes rose, too—over 2021 and over 2019.