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Thursday April 26, 2018

Is this, finally, the end of the supermarket's dominance in American food distribution?

  • "Although many people don’t realize it yet, grocery shopping and cooking are in a long-term decline," claims a September Harvard Business Review feature. "They are shifting from a mass category, based on a daily activity, to a niche activity that a few people do only some of the times," according to author and CPG consultant Eddie Yoon. "The supermarket and grocery business is likely to suffer strong headwinds in the future, due to long-term shifts in consumer behavior."
  • For the first time ever, according to USDA as quoted by an online markets analyst, the amount spent eating out has surpassed what U.S. consumers spend on food at home. "...Spending on food at home and food away from home have been converging over the past 60 years," he writes, "with traditional home-cooked family meals on the decline."
  • The Washington Post, in March 2015, pronounced at long last the death of the home-cooked meal.

But if true, this could be the longest death rattle in history.

Granted, restaurants and away-from-home dining are big, making up 4 percent of the total US gross domestic product. More than 1 million dining establishments did an estimated $782 billion in business last year.

And it is true that USDA showed the average household's percentage of income spent on food away from home first passed the percentage spent on food at home in 2015. But, as with most "trends," the devil is in the details.

Harvard Business Review's Yoon bases his contention on his own in-house surveying. "...consumers fell into one of three groups: (1) people who love to cook, and cook often, (2) people who hate to cook, and avoid that activity by heating up convenience food or outsourcing their meals (by ordering out or dining in restaurants), and, finally, (3) people who like to cook sometimes, and do a mix of cooking and outsourcing, depending on the situation," he writes. According to that research, done 15 years ago, the sizes of the three groups were about 15 percent, 50 percent and 35 percent, respectively.

Repeating the same study today, he says, finds the numbers have shifted: "Only 10 percent of consumers now love to cook, while 45 percent hate it and 45 percent are lukewarm about it. That means that the percentage of Americans who really love to cook has dropped by about one-third in a fairly short period of time."

It's an interesting idea, according to North Carolina State food sociologist Sarah Bowen, "but it's a lazy analysis."

"You could say (as the author does) that the percentage of people who love cooking has dropped by one-third," she writes, "but a more accurate headline would be: 'Very few people loved cooking 20 years ago, and that is still true today.'"
A change of only five percentage points, from 15 percent to 10 percent for the "love to cook" category, is hardly significant enough to make broad conclusions, she argues. "Meanwhile, this author does not mention the fact that the same 'study' finds that the percent of people who are 'so-so' about cooking (i.e., who don't love it but still try to do it) has increased by 10 percent and the percentage of people who hate it has decreased by 5 percent. I'm not convinced that we are seeing important trends here."

Gallup, likewise, shows Americans' tendancy to choose restaurants is little changed from 10 years ago. Six in 10 U.S. adults recently reported eating dinner at a restaurant at least once in the past week, but that figure is nearly identical to the 60 percent who said the same nearly 20 years ago, in 2008.


The averages also mask some highs and lows that are important in assessing the health of eating at home. U.S. households in the top one-fifth of income spent an average of $12,350 on food in 2015, 49 percent of which went toward food away from home. On the other end of the spectrum, households in the lowest 20 percent of income spent $3,767 on food, but only 34 percent of that was for food away from home.

And even if this is a problem for grocers, author Michelle Moon argues it's no "new" problem.

"There was never a time when a majority of (let's be honest) women really loved cooking. I'd argue in this study that the rise of really good quality prepared food in recent years - I'm looking at you, Whole Foods hot bar, and also at the likes of Trader Joe's grab-and-go and quick-heat entrees - has allowed people who marginally liked cooking for the quality to move away from doing it except as a hobby," writes the author of Interpreting Food. "I'd say the future of grocery is definitely in the dream of the 1890s - good quality, ready-made, prepared food at a decent price."

USDA statistics backs that interpretation up. Even if restaurants are slowly eating into the supermarket's share of sales, the retail grocer still owns the healthfulness category. USDA says meals and snacks based on food prepared away from home contained more calories per eating occasion than those based on at-home food. Away-from-home food also tends to be higher in fat and saturated fat and lower in calcium, fiber, and iron than food prepared at home.

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