Restaurants Continue to Offer a Cost Advantage as Grocery Inflation Climbs


Consumers are facing pressure from multiple points, and the current economy is shifting their behavior, which presents a restaurant marketing opportunity.

  • Record inflation of 7.1% continues to outpace growth in wages.
  • Consumer discretionary spending is down as ritual household expenditures such as gas, utilities, and groceries face strong upward pressure.
  • Customers are trading brand preference and loyalty for greatest perceived value.

Brands that understand the new consumer value equation can create preference and steal share.

While the impact inflation is having on the consumer and the restaurant industry is well known, the impact inflation has had on the Rural consumer is not as widely known.

In an analysis of CPI data by Iowa State, from June 2020 to June 2022 Rural consumers saw a 49.1% reduction in their discretionary income compared to only 13.1% for Urban consumers.  During this period earnings only rose 6.1% against inflation of 9.1%.

Value is more important NOW to the consumers in the rural markets Mspark serves!

Inflation & Rising Prices Impact on Rural Consumers

Restaurants (food away from home) continue to have a cost advantage over grocery (food at home) with inflation rising slower for restaurants.  When the gap widens and restaurant inflation is lower, restaurant typically see a rise in sales when the manager of the household budget determines “It is cheaper to eat out!”  The gap has declined from 5.5 points in July to 4.5 points in September, and 3.5 points in October and November. The 12-month Grocery inflation declined from 13.5% to 13.0% while inflation while restaurants increased from 8.0% to 8.5%

However, inflation is hitting pocketbooks hard, and consumers are looking for lower prices (52% want more deals and value).

The cost advantage restaurants currently offer over groceries is enabling restaurants to win market share.

Check out our case studies to see how restaurants have leveraged multi-channel campaigns anchored by direct mail to increase market share and ROI. For more restaurant marketing strategy and insights, visit our Restaurant Industry page, and download our Restaurant Marketing eBook. Reach out today to plan your strategy!

Sources: Bureau of Labor Statistics, November 2022 CPI Report; Iowa State analysis, July 2022 (CPI, June 2020-June 2022); US Census Bureau – October Monthly Retail Trade and Food Services (shown in million dollars)