Restaurant sales

Grocery sales plummet as restaurant sales pick up

Diving brief:

  • The U.S. restaurant industry saw its fourth consecutive month of sales acceleration in August, with sales up 3.7% as major grocery chains saw sales fall 7% from July , according to new data from M Science, a data analytics company.
  • The grocery brands that saw the biggest deceleration in sales 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 witnessed a deceleration in sales. Both Lidl and Wegmans saw sales growth accelerate in August.
  • The online segment of the grocery industry saw a particular month-over-month deceleration in sales in August, while the natural and organic subsector saw relative sales growth, according to Ms. Science.

Overview of the dive:

As year-over-year dollar growth in the grocery industry continues to outpace historic growth rates, the past month has seen a decline in grocery basket growth, while the he catering industry experienced an acceleration in sales from July. These trends, while only a small glimpse into a longer trajectory of largely positive performance for the grocery industry, indicate that Americans are beginning to spend more of their income on meals in restaurants rather than grocery stores, at least compared to the start of summer.

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

Courtesy of M Science

Courtesy of M Science

FreshDirect, which provides same-day service in New York and is competitive throughout the Mid-Atlantic and Northeast, was the only online delivery service to report positive month-on-month sales growth on the other. Just last month, the grocery delivery company expanded 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 certain parts of New York City.

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

It’s unclear whether the decrease in consumer anxiety extends to in-person dining at restaurants, though 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 meal specials, delivery promotions and even the grocery store. According to M Science, all sub-sectors of the foodservice industry, including QSRs, casual and fast-casual restaurants, saw monthly sales accelerate in August.