Gourmet News

Americans Think Grocery Store Profits, Inflation Higher than Reality

Published February 20, 2023

Americans believe that grocery store profits are at a 35.2 percent net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5 percent, and that food-at-home inflation is 24.3 percent, double the annual rate reported by the U.S. Bureau of Labor Statistics according to the latest dunnhumby Consumer Trends Tracker. The CTT is part of the dunnhumby Quarterly, a strategic market analysis of key retail themes, with the third edition being focused on navigating uncertainty.

n the third wave of the CTT, dunnhumby also found that despite perceived inflation reaching a new high, customers are coping a little better compared to the last wave of the report. Consumers who reported they would have difficulty covering an unexpected expense of $400 dropped from 64 peercent in July to 60 percent in November 2022. In addition, 48% of consumers reported they are getting the kind of food they want to eat compared to 43 percent in the second wave.

“In this latest wave of our CTT study, we found that retailers are in a precarious position with their brand perception, since customers are vastly over-estimating grocers’ store profit margins and inflation rates, while they themselves are battling food prices,” said Matt O’Grady, president of the Americas, dunnhumby. “Retailers need to show they are empathetic to customers through their prices, their rewards/loyalty offers, and with messaging to best support shoppers during these challenging financial times.”

Key findings from the study:

Inflation worries are driving customer sentiment. When consumers were asked as part of the survey, why customer sentiment is the lowest it has been in 50 years, consumers responded by a five to one margin that inflation was the cause, with covid coming in a distant second. When asked about 2023, only 22 percent of respondents predicted inflation and the state of the country will get better. Forty-seven percent of respondents predicted inflation and the state of the country would improve three years from now. Over a five-year period, 54 percent of consumers are optimistic that their own finances and the state of the country will improve.
Younger shoppers are most optimistic, but only in the short term. For 2023, 31 percent of consumers aged 18-34, believe their finances and the state of the country will get better, compared to just 13 percent of consumers over 65. Over a three and five-year timeframe however, there were no significant differences by age.
Food insecurity remains a problem. Thirty-one percent of households reported they have skipped or reduced the size of a meal for financial reasons. Thirty-nine percent of respondents under the age of 44 have skipped or reduced meal sizes. And households with children at home are 8 percent more likely than adult-only households to have skipped or reduced meal sizes. Consumers living in Idaho, Oklahoma, Arkansas, Tennessee, and West Virginia reported the highest numbers, where over 40 percent had skipped or reduced the size of a meal in the last year. Consumers living in Washington, Minnesota, Michigan, Massachusetts, and Maryland reported the lowest numbers, with approximately 20 percent having skipped or reduced the size of a meal in the last year.
While improving slightly, most consumers continue to struggle financially. No state is immune, but the states with the highest rate of financial insecurity (75 percent) are Oregon, Oklahoma, Louisiana, and West Virginia. The states with the lowest rates of financial insecurity (45 percent) are Minnesota, Wisconsin, Maryland and Delaware.
Consumers want easy to shop and more convenient eCommerce solutions. Eighty-one percent (up 4 percent) of consumers say easy to shop websites and apps are important to them and 78 percent (up 4 percent) want retailers to have more convenient delivery and pick up time slots. For consumers aged 55 and over, ease and convenience are even more important. In this age group, 84 percent say easy to shop websites and apps are important to them and 81 percent want convenient delivery/pick-up time slots available. Families are 16 percent more likely to interact with a store’s app and have a 10 percent greater need for the retailer to pick products as well as they would, compared to shoppers without children.
Consumers want retailers to help them make healthy choices. Forty-four percent of consumers reported it was very or extremely important for retailers to help them make healthy choices, an increase of 3 percent from the previous wave. In addition, 48 percent reported they choose healthy foods while shopping (up 2 percent), 40 percent read diet and nutrition information (up 2 percent) and 29 percent are buying products for a specific diet when they shop. The top five diets in the U.S. cited in the survey are 1) Keto, 2) Low carb, 3) Low sugar, 4) Vegetarian, and 5) Gluten free.

For this study, dunnhumby interviewed 6,012 consumers, representative of the U.S. grocery shopper nationwide. The online interviews for Wave 1 were conducted in April 2022, Wave 2 in July 2022, and Wave 3 in November 2022. Approximately 2000 individuals were interviewed for each Wave of the study.

The CTT study is designed to uncover shopper needs, perceptions and behavior over time, and to complement dunnhumby’s Retailer Preference Index which measures the strength of retailers’ customer value proposition. The dunnhumby Consumer Trends Tracker can be accessed today.

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Food Costs Lower Profits for NYC Restaurants, Report Shows

Published February 20, 2023

The 2023 “New York City State of Restaurants” Report released by TouchBistro reveals that restaurant sales in New York City, on average, have recovered to approximately 76 percent of pre-pandemic levels, which is on par with the national average. However, due to the rising food costs and other expenses, the profit margins of full service restaurants in New York City fell almost a point to 10.1 percent, which is .5 percent lower than the U.S. average of 10.6 percent.

“After contending with the worst of the pandemic, many restaurants had their sights set on a more successful recovery, but it’s been a mix of highs and lows,” says Samir Zabaneh, CEO of TouchBistro. “Now, as the restaurant industry enters another year characterized by economic instability and change, many restaurants are once again preparing to adjust the way they run their businesses. Restaurant guests are feeling the bite with higher menu prices, but restaurant owners are working hard to minimize the increases so it is not cost prohibitive for guests to continue to enjoy the dining venues and foods they love.”

The average menu price increase in New York City is 16 percent, which is just slightly above the national average.

New York City restaurants report spending 45 percent more on food costs on average compared to the year prior, which is about the same as the rest of the U.S. Across the nation, fresh fruits and vegetables have seen the biggest food costs increase, followed by meat and seafood.

Nearly all New York City restaurants (99 percent) say they are short staffed, with most operators saying they are short about six staff members on average. This is likely due to the city’s high turnover rate of 33 percent. Restaurants across the U.S. are experiencing a similar staff shortage issue (96 percent), though not quite as severe as in New York City.

The most in-demand roles in New York City are bartenders and managers, which is a bit of a shift from last year when servers and bartenders were the hardest to find. Bartenders continue to be hard to find across the rest of the U.S., but a shortage of line cooks has also become a problem.

Key New York City restaurant trends in the report:

Online ordering and delivery still going strong – Most New York City restaurants are doing more than a quarter (28 percent) of their business through online ordering. And while Uber Eats is the number one online ordering platform across the U.S., direct online ordering is the preferred solution for New York City restaurants.

Menu flexibility and modifications – Despite the rising cost of food, more than two-thirds of New York City restaurants have added items to their menus, including extended wine lists and adding more modification options.

Wages for staff increased – In addition to 55% offering higher wages, restaurants in New York City also spend $4,561 training each new employee, which is 15 percent higher than the national average.

Popularity of loyalty programs – New York City restaurants have embraced loyalty programs more than ever before. Now, more than two-thirds of the restaurants in the city offer a rewards program.

Social media engagement – Twitter and Facebook continue to be the most popular social media platforms for restaurant promotion. However, TikTok is on the rise as well and has actually overtaken Instagram in terms of popularity among restaurateurs.

The 2023 New York City State of Restaurants provides more in-depth insights that operators are using to succeed in this coming year. It can be downloaded for free at www.touchbistro.com/blog/nyc-state-of-restaurants-report. The national State of Restaurants report is also available for free download at touchbistro.com/blog/state-of-restaurants-report.

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Vollrath’s Bartelt Retires; Lampe to Join as CEO, President

Published February 20, 2023

After successfully navigating the global supply chain challenges and having a record-breaking year of sales in 2022, Vollrath Company President and CEO Paul Bartelt has decided to retire after leading the organization for over 15 years.

Erik Lampe will join the company in March to assume the position of president initially and then take over as CEO in June. He comes to Vollrath with a background in general management, strategic growth, innovation, and operational performance for industrial companies. He spent the majority of his career working for Oshkosh Corporation and McKinsey & Company, where he served in a variety of strategic leadership roles. For the last year, he worked as a principal for Comvest Partners’ Operating Advisory Group, where he served as a leader for the firm’s privately held companies, guiding them through the recent dynamic environment.

Bartelt says: “There comes a time for all of us to move on, and I feel confident that this is the right moment for me to transition to the next phase of my life. It’s been the privilege of a lifetime to be the President and CEO of this great company, and with Erik, I am confident to leave the organization in the most competent hands.” Bartelt will remain on the Vollrath Board for the foreseeable future and will continue to provide support for the company and the new CEO.

“Given Vollrath’s family-held history and long-term orientation into the future, I am proud to be a part of the company’s next chapter as it surpasses the 150-year anniversary,” says Lampe.

Additionally, VP of Finance and CFO Steve Heun has also decided to step down after being with the company for over 15 years also.

Tina Kreidler, the current director of finance & controller at Vollrath, will be promoted to VP of Finance and will work closely with Heun until his departure this fall.

Danielle Kohler, Chairwoman of the Vollrath Board, said: “The family wants to thank Paul and Steve for doing a tremendous job over their 15-year tenure. They have built an incredible company and team. We are also grateful they will both be with us for a smooth transition into the next chapter of the company. We are confident that Erik Lampe, who is stepping into Paul’s shoes as our next CEO, is highly qualified and will fit well into our culture as our new leader.”

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