US foodservice faces soft demand, and food retail recovery slows

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Fresh data on credit and debit card transactions from Earnest Analytics shows price sensitivity increasing in terms of restaurants and food retailer performance as consumers cut back on spending.

Restaurants, in general, have felt the sting of higher menu prices and consumer financial distress. Even quick-service restaurants (QSR), the more affordable foodservice option, are seeing significant challenges, with steep declines worsening from -4% in Q1 to -5.5% YOY in Q2. Many restaurants have a challenge ahead as the current conditions have no easy fix and require creative ways and investment to provide the affordability consumers expect.

Meanwhile, food retail is yet to feel the positive impact of consumers trading foodservice for grocery. Discounters and wholesale clubs remain better positioned to provide value, increasingly winning consumers’ hearts and share of wallet as they invest in nationwide expansion. The expected demand conversion from foodservice may not be instantaneous, but will come as consumers choose to buy a larger share of their food at retail. Retailers are set to benefit from various retail formats, driving retail landscape adjustments in post-pandemic and post-inflationary times.