While top-line retail sales data for September increased by 0.7%, beating analyst expectations of a 0.2% decline, food-focused categories remained only slightly up from August. Grocery sales were up by 0.7%, and restaurants, a proxy of food and drink places, were up 0.3%.
The relatively flat numbers reflect consumers remaining in a holding pattern coming off the high point of the delta variant cases in September.
April was the first time since the pandemic when food services sales outpaced grocery, demonstrating that consumers were willing to return to pre-pandemic shopping habits. While we can see trends in the buying habits, retail sales should be taken with a grain of salt as they are not Consumer Price Index adjusted.
The takeaway
As we head into the holidays, food businesses should continue to prepare for increases in demand. As businesses both in the grocery and restaurant categories face increases in food costs, they will likely need to pass those costs along to customers to maintain margins.
