There are two key drivers impacting both food service and grocery retail, and that’s inflation and population growth, says Lori Rakoczy, associate principal for Technomic.

“Right now, away from home, restaurants are still at 6.5% inflation,” Rakoczy says. “Traffic has gone down. It's been steady. I think people are starting to get used to the price it is, but we don't expect the prices to come down in restaurants. It's just that they will stop growing as much as they were. And at home retail, we're at 3%.”

As for U.S. population growth, Rakoczy says it’s really slowing down, with a forecasted growth of just 0.6% through 2030. From 2016 to 2023, it was at 0.7%.

“So that's only going to be about 15 million more people over the next [seven years] to 2030,” Rakoczy says. “That’s going to mean that there are just less customers, so that’s going to impact food service and grocery differently, depending on the segment, depending on the age, but it's just something to consider when thinking about strategies moving forward.”

While there will be fewer people in the U.S. population, we will see a shift in aging, she says. The 18 to 24-year-old range will be flat, but there will be about 17 million more consumers in the 65-plus age group by 2030. This group will account for 17% of the population.

“That will have a big impact on food service because a lot of people are moving out of the prime restaurant spending years and into more grocery,” Rakoczy says. “You could see some ups and downs here, depending on segment and restaurant, but most likely what we'll see is there’ll be more consumers that are shopping for food at home rather than going to restaurants just purely by the population shift.”

For 50 years, Technomic has provided foodservice clients around the globe with research and strategic consulting support to enhance business strategies, decisions and results. Since November of 2020, Technomic and the North American Meat Institute have partnered on an in-depth consumer study, surveying 500 consumers a month to get their perceptions and thoughts around the meat and poultry industry, but mainly on trust. Those five pillars of trust are health and wellness, food safety, environmental impact, animal welfare, and labor and human rights (occupational safety). Rakoczy says the idea being, “if you increase trust in these areas, you will increase consumption.”

Some key findings from their recent surveys have shown:

Current trust scores range from 3.4 to 3.7 in each of the five focus areas. Increasing scores to a 4 is estimated to boost daily animal protein consumption by 15%. Rakoczy says, considering the population growth, this would increase the demand by 20%.

“If these trust scores goals are met by 2030, so that's going just from 3.4, 3.7 to 4, this could result in almost a $23 billion incremental gain,” Rakoczy says. “That’s how that 15% consumption and 20% demand with population really translates into real dollars, and this highlights what's really important in the industry as far as the consumer goes to increasing consumption.”

The study has also found that protein consumption has held steady year over year, with modest increases across most proteins. Looking at protein frequency percentage once a week or more for Q2 2022 versus Q2 2023, chicken has increased 1%, with beef and pork seeing jumps of 3% and 4%, respectively. Eggs was the only category to drop, down by two points, which Rakoczy attributes to price.

Technomic and NAMI also sponsor a yearly survey with food service operators and decision makers in the grocery space. Some key findings include:

“People are having to take less action now that the prices are becoming regulated, and in some cases we're seeing consumer traffic increase in some areas,” Rakoczy says. “They're not seeing consumers push back as much even if they're increasing prices.”

Also, despite the cost challenges, operators still say they want to source their meat and poultry from suppliers that are committed to reducing environmental impact. Rakoczy says this correlates with their consumer survey, that shows 62% of 18 to 34-year-olds are willing to pay more for items and products that they know are sustainable.

When it comes to pre-packaged refrigerated, pre-packaged frozen or direct from the meat counter, 42% of consumers surveyed prefer the prepackaged refrigerator followed by the meat counter. Since 2019, 62% of consumers indicated their purchasing habits for this have stayed the same.

“So, they had been purchasing like this before, but more than a third, so 34%, are saying now that they are purchasing more prepackaged goods and less from the meat counter,” Rakoczy says. “That’s a pretty significant jump of people that have turned more to the prepackaged meat.”

Why are consumers choosing one type of packaging over the other? The reason is convenience, Rakoczy says.

“That convenience has just become more important to consumers, especially as lifestyles are changing and people want fast. Sometimes convenience wins out over taste, a lot of the times, especially even with our younger consumers,” she says.

However, the survey has found that consumers perceive meat from the counter as fresher, better tasting and of higher quality than prepackaged. Forty-four percent of consumers that do buy prepackaged say it's because of storage and better keep. More than half say they want the ability to be able to see the meat and the poultry in the packaging. As for labeling, nutrition, food safety and even recipes continue to be of interest across all generations.

As for improvements in packaging and labeling, consumers indicated they would like to see more education, such as nutrition claims and cooking instructions. Sustainable packaging was also important, especially among the younger consumers.

“I think with the packaging, what that's really saying is, to work on what kind of claims would resonate most with consumers. What can be on the packaging to make it address the freshness? Is it the date? Is it design? Is it various claims about natural, no additives? Things that really speak to what consumers are feeling when they see meat in the meat counter,” Rakoczy says. “And then the ability to see the meat in the package is the most important, followed by labeling. Again, going back to labeling being very important, just really addressing those key drivers.”