Households can’t stand inflation heat, so they’re going back to the kitchen

Australia’s passion for takeaway and restaurant meals could be the next casualty of the cost-of-living crisis as food retailers highlight signs that consumers are further tightening their belts and cooking more at home.

The change is being felt across retailing, with Coles and Woolworths reporting a higher number of shoppers buying groceries to cook at home, while pizza giant Domino’s sales weakened after it pushed up prices to meet cost pressures.

The major supermarkets are preparing for more shoppers to ditch eating out in favour of making their favourites at home instead. Credit: Istock

Woolworths boss Brad Banducci said when reporting the retail giant’s earnings last week that evidence was emerging that consumers were changing their behaviour as people looked to rein in household budgets.

“If you look at the last two weeks, the move to trading into eating at home has started to happen,” he said.

“A lot of people are trading into Woolworths, trading out of eating out of home, but [they want] to have a kind of eating out experience at home,” Banducci said.

He said supermarkets had more of a role to play in helping customers with cooking and meal solutions in this environment.

He noted that the rising popularity of the Mexican food category in Australian grocery stores over the past few years showed consumers’ interest in finding easy ways to cook meals together.

Coles boss Steven Cain also noted a shift in customer behaviour.

“We will see a moderation in hospitality which will benefit the supermarket business,” he said.

The resilience of the hospitality sector will be revealed on Tuesday when new retail trade data from the Australian Bureau of Statistics (ABS) will show how the restaurant, cafe and takeaway sector performed in January. There is evidence that the spending growth is plateauing, with monthly turnover relatively unchanged between November and the end of last year.

The nation’s restaurants and takeaway outlets have boomed since COVID restrictions were lifted – monthly turnover in the sector went from $3.1 billion in August 2021 to $5.1 billion in December 2022, ABS data shows.

Domino’s shocked its shareholders last week when it reported that sales growth in the six months to December was weaker than expected.

Chief executive Don Meij said the company had got it wrong on how it passed on rising costs to customers after increases in product prices and delivery fees caused customers in markets like France and Japan to order less often.

Despite challenging conditions, he was upbeat about how budget takeaway operators could perform in this environment.

“Consumer sentiment is lower, but the fast food industry is buoyant,” he said.

Other local quick-service retail brands are also optimistic about capturing customers despite the cost-of-living crunch.

Founder of Grill’d burger franchise Simon Crowe said earlier in February the chain tended to “gain a net influx of guests” when consumers tighten their belts, with diners moving from more premium options to fast food.

The boss of Boost Juice and Betty’s Burgers operator Retail Zoo, Nishad Alani, also flagged that diners wanted “affordable indulgence” during tough economic times.

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