Consumers Still Stockpiling Food
As the country reopens, a growing number of consumers are returning to dining out, but that hasn’t seemed to slow their purchases at grocery stores.
The U.S. Census Department reported that combined spending at grocery stores, bars, and restaurants reached an all-time high of $139.2 billion in May, up a sharp 25.7% from May 2020, when most of the country was still in lockdown.
However, Sarina Sharp, analyst with the Daily Dairy Report, notes that in both April and May of this year, consumers also spent 10% more on food than they did in the pre-pandemic months of April and May 2019, with higher restaurant sales driving the increases.
“Since March of this year, restaurant spending has soared compared to last year’s spring lockdown levels,” Sharp says. “But grocery sales have also proven surprisingly resilient, falling only 1% from the extraordinarily high totals shoppers rung up during the 2020 lockdown.”
For sure inflation accounts for some of the rise in spending, with restuarants hiking prices to pay rising labor and food costs, and supermarket prices up 15%, on average, compared to pre-pandemic prices.
“But higher costs explain only part of the increase,” Sharp notes. After adjusting for inflation, total food expenditures in May were still up 22.8% from May 2020 and 3.5% from May 2019.
According to a survey published by Bloomberg, two-thirds of respondents said they continue to buy the same number of grocery items each week as they did at the height of the pandemic. While another survey of Kroger customers showed that 92% said they enjoy cooking at home as much or more than they did prior to the pandemic, Kroger CEO Rodney McMullen said on a recent analyst call.
“It’s also likely that some consumers and restaurants are scarred by a year of shortages and are still stocking their pantries and freezers with more food than they held pre-pandemic,” Sharp says. “As shoppers and restauranteurs become more confident that they’ll be able to find their favorite foods, they may dig into their inventories, which would reduce purchases down the road.”
But for now, she says, “spending is high, and food is flying off the shelves, and that has helped to move dairy products.”