We’ve all experienced how the Covid-19 pandemic has influenced and changed the way we live our lives as individuals, but how has the pandemic changed ‘society’ as a whole? According to a survey conducted by Statista in June of 2020, the second-highest increased activity [after watching tv] is home cooking. 56% of respondents said that they were cooking more.
This has elements of the classic double-edged sword. This is really good news for the supermarkets in the US and around the world, but this is also bad news for restaurants. Restaurants have been hit particularly hard with the lock-down as in many areas, they have or had been closed all-together or they have had to significantly curtail the number of people allowed for in-store dining. In New York City for example, restaurants are only allowed to reopen at 25% capacity on September 30th (as of the writing of this article, this is next week).
In order to understand how this will affect things over at least the next several months while this continues, it’s important to understand at-home meal behavior prior to the pandemic. This was we can extrapolate things into the future.
Pre-Pandemic At-Home Dining
Prior to the pandemic, there were several reasons why people ate at home. [Now it’s because we have to, but after the lock-down restrictions ease, this could alter people’s behavior in the future.] According to SupermarketNews, the main reason that people eat at home is to save money (77%). The other 2 main reasons for eating at home are; Healthier Eating (51%) and Spend More Time With Family (41%).
Financial reasons are always a very big indicator of how and why people do what they do. The lock-down has affected peoples’ finances in many ways and as people discover the real savings associated with eating at home, this could be a very big reason why people may want to continue eating at home. The reason that eating at home saves you money is really quite simple, you don’t have to pay for things that are not directly related to the food, like; the time to prepare the meal, the cost of someone serving you, the cost/rent of the restaurant and of course the profit to the owner of the restaurant. According to the Morning Consult (see page 6) in 2018, 81% of meals eaten at home were prepared at home, and 8% from take-out. The other 11% of the people said they ate their meal out or that they declined to answer.
When restaurants were 100% closed for any business other than this low figure of 8% plays very much into the NY Post story (see above) about 90% of NYC restaurants not able to pay rent in August, but it also indicates when people eat at home, they tend to make the meals themselves. But what does this really mean for how people behave? Last night, I grilled a meal of sausage and peppers for the family. In our house, we have some dietary restrictions that require the cook (me) to remove the skins from the peppers before I cook them. This adds a lot of time to meal preparation. I started to cook at about 4 in the afternoon and we sat down at 6 to eat. 2 hours is not what most people are willing to put into preparing a meal. According to Kitchen Stories (you’ll need to translate this site because it’s in German), 41% of people are willing to only spend up to 1/2 hour making a meal and 50% are willing to spend between 30 and 60 minutes. This puts my 2 hours into the 9% category of over an hour.
What IS Home Cooking?
Looking at last nights’ dinner of sausage and peppers as an example, meal preparation means different things to different people. To my ex-wife, meal preparation meant either opening up a Stouffer’s meal or making a phone call. To me, I like to touch and actually prepare the meal, this is what I consider to be home cooking. Last night’s meal was a bit extreme for preparation because not only did I touch the uncooked food, I grew some of it. I grew the peppers and picked several of them about an hour before I started cooking them.
Why is the difference in views of cooking important? Well, because this understanding can help determine how trends will or will not continue after the lock-down, but most importantly it can tell you what companies may perform better than others after the lock-down. What are the different ways that meals can be prepared?
- Mostly from scratch, which is when you prepare a meal without prepackaged and ready-made ingredients.
- Semi or fully prepared meals, which is the polar opposite of scratch. This method can mean anything from opening a package and popping it into the microwave to opening a box, pouring together a couple of ingredients, then heating it up.
- Combination, which is where there are some items made from scratch and some that are fully or semi-prepared.
The chart below illustrates how people prepare their meals, according to a study by FMI. About 37% of meals are prepared mostly from scratch while only 7% of meals are essentially pre-prepared meals. This leaves the majority of meals (56%) prepared from some combination of from scratch and semi or fully prepared.
Whatever your definition of home cooking is, there an investment opportunity to be seen. This trend is going to continue to help supermarket stocks, like; Albertson’s (which controls Albertson’s, Safeway, Shaw’s), Ahold Delhaize (which controls Stop & Shop, Food Lion, Giant Food) and Kroger’s (Harris Tweeter, Fred Myers). The fact that semi/fully-prepared meals are at least a component of 63% of meals this will help companies ranging from Bird’s Eye and Green Giant and Lean Cuisine to Campbell’s and Star*Kist to Freshly and Daily Harvest and Home Bistro.