Grocery sales decline as restaurant sales increase

Dive brief:

  • The U.S. restaurant industry had its fourth consecutive month of sales acceleration in August, with sales up 3.7% as large grocery chains saw sales drop 7% from July , according to new data from M Science, a data analytics company.
  • The grocery brands that experienced the strongest sales deceleration in August compared to the industry average were Smart & Final, Stop & Shop and Food Lion. Fairway Market, ACME, Randalls, Food 4 Less, Fry’s, Ralphs, Roundy’s and online delivery service Instacart also saw sales decelerate. Lidl and Wegmans both saw their sales growth accelerate in August.
  • The online segment of the grocery industry saw a particular monthly deceleration in sales in August, while the natural and organic subsector saw relative sales growth, according to Science.

Dive overview:

As the dollar’s year-over-year growth in the grocery industry continues to exceed historical growth rates, the past month has witnessed a decline in the growth of grocery baskets, while that the restaurant industry saw an acceleration in sales starting in July. These trends, while only a brief glimpse of a longer trajectory of largely positive performance for the food industry, indicate that Americans are beginning to spend more of their allocated income on meals. in restaurants rather than in grocery stores, at least compared to earlier in Summer.

More densely populated areas, which have maintained tighter restrictions on meals during the coronavirus pandemic, have seen restaurant sales depressed compared to less densely populated areas, according to M Science. Online grocery delivery saw flatter sales deceleration in the regions stricter in-person dining restrictions, as in New York, New Jersey and Connecticut. In New York City, which had the most restaurants and cafes per capita of any city in the country before the coronavirus pandemic, Gov. Andrew Cuomo said restaurants can resume dining indoors at 25% of their capacity on September 30.

Courtesy of M Science

Courtesy of M Science

FreshDirect, which provides same-day service in New York City and is competitive throughout the Mid-Atlantic and Northeast, was the only online delivery service to experience positive month-to-month sales growth on the other. Last month the grocery delivery company increased its capacity in New Jersey, Connecticut, Long Island, the Hamptons and Westchester, and in June it added a two o’clock, on-demand delivery service to residents of parts of New York City.

Data from M Science points to a particularly severe decline in sales of the online grocery delivery service Instacart, which saw the dollar’s growth decelerate month-over-month by nearly 60 percentage points. He attributed the company’s reluctance to consumer weariness with high shipping costs and a greater sense of security when shopping in person.

It is not clear whether the decrease in consumer anxiety extends to in-person dining at restaurants, although states including Texas, Mississippi and Pennsylvania Relax provisions on indoor eating bans this month, especially if infection rates do not drop significantly.

The pandemic has forced restaurant chains to innovate, with many offering special meal deals, delivery promotions and even groceries. According to M Science, all subsectors of the restaurant industry, including QSRs, casual and fast food restaurants, saw their monthly sales accelerate in August.

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