Restaurant spending earlier this year overtook grocery spending for the first time on record, according to a MarketWatch report. That number excludes the superstores that sell far more than groceries, such as Wal-Mart and Target, but the trend seems to be the same at those outlets as well.
A study released last week by the J.P. Morgan Chase Institute found that the bank’s 25 million customers spent more of their gasoline savings on restaurants (18 percent) than groceries (10 percent). The consumer price index data released by the Labor Department on Thursday suggests the same thing. Food away from home has grown in price by 2.9 percent over the 12 months ending September, but food at home has risen just 0.8 percent over the same time period.
There are a number of reasons for the shift. There are more people working, and further, wages, when adjusted for inflation, are increasing, albeit not rapidly. The Labor Department on Thursday reported a 2.2 percent rise in real weekly earnings in the year ending September.
Along with this growth in spending power has come a shift in spending tastes. Restaurant spending has been at least 6 percentage points stronger than the overall pace of retail sales growth every month this year, according to the U.S. Commerce Department. Only online spending has grown faster than restaurant spending this year.
What does this mean for the grocery companies? It means trying out new initiatives. Wal-Mart, for instance, says it will invest in price–in other words, discount more–improve their offerings of fresh food and boost their online grocery program to cater to those who will then pick up food on the way home. Whole Foods is also talking about discounting more and investing in technology.
