What’s Cooking in the Food Industry?

This past year has transformed food consumption across the spectrum of industries. Closed restaurants and grocery store shortages drove shifts in consumer behavior, giving rise to increased frozen food purchases by 21 percent¹, as up to 40 percent more people who were confined to their homes cooked their own meals.² Many consumers bought second freezers to accommodate additional meat and frozen meal storage when they were able to find retailers with appliances in stock. Restaurants and food manufacturers alike saw an uptick in prepared meals, which offered some comfort to those who were less than thrilled about the lack of options. And many grocery stores added delivery services to service customers hesitant to leave their homes.

Consumer expectation and demand were significantly impacted by all these changes in a short period of time. People who had never ordered groceries online previously overcame that hesitation, and many continue to enjoy the convenience of grocery delivery services. Market research reveals 75 percent of frozen food purchases occurred online.³

Change in consumer behavior occurs naturally over time with the availability of new products, technology, and conveniences; yet most of our recent behavioral shifts were not by choice. Manufacturers and retailers were compelled to get creative to remain profitable, and consumers were obliged to adapt to social contact limitations.

Which trends will endure?

Dining out:

• Currently consumption habits vary by state, depending on which have relaxed social distancing measures. An increase in remote working makes cooking one’s own meals easier – and more economical – than buying lunch out. For those who preferred to buy lunch at the local deli, grabbing a premade or frozen meal is more convenient.
• More restaurants are offering meal subscriptions to make up for lost revenue of indoor dining. However, in fully open states, the restaurants that did not close down are seeing normal customer capacity again.

Grocery Shopping:

• A fear of future shortages has led more people to stock up on food.  
• Grocery stores, including smaller chains, that did not previously offer home delivery have added this convenience to alleviate the problem of social distancing. Those lacking the capacity for home delivery (some unable to absorb the 10 percent third-party delivery fees) were still able to offer in-store pickup.
• Already accustomed to ordering almost everything online, millennials preferred online grocery shopping and are likely to continue doing so long after the health crisis passes.
• Moving forward, grocers should hone their online shopping experiences to integrate the platform as a long-term solution for a growing internet shopping customer base.

Manufacturing:

• More consumers turned to meal kits as easy alternatives to limited indoor dining availability. Grocery stores now carry a larger selection of meal kits adjacent to their fresh produce selections. Most growth was seen in frozen seafood, meats and appetizers with pizza and dinner entrée’s topping growth in frozen food purchases over the past year. Even a year later, more consumers are making food at home and the frozen food sector opens meal flexibility to home cooks while offering a buffer from a future food shortage.

Consumers and businesses alike have learned many lessons throughout this transition, which has led businesses to add new sales channels and consumers to test other product delivery methods. A fear of running out of food during a crisis has forever altered consumer thinking and demand. Surviving another health crisis or supply chain disruption means being prepared with alternative sales channels and safety measures and a willingness to think outside the box.

¹ American Frozen Food Institute
²https://foodinsight.org/consumer-surveys-covid-19s-impact/
³ https://www.foodbusinessnews.net/articles/18405-frozen-food-industry-seeks-ways-to-extend-sales-surge