Tastes Shift From Pate to Pot Pies

Concerned about the weakening economy and their own security, consumers are changing their eating habits--shifting from gourmet items to less expensive comfort foods and from upscale restaurants to pizza delivery.

Supermarkets reported that sales of some high-end deli items and expensive cuts of beef declined at the end of September, and sales of comfort foods such as pancake mix, creamed corn, potatoes, peanut butter and peas and carrots posted double-digit increases from the same week last year, according to grocery data released this week by AC Nielsen.

“This week, I bought pot pies for the first time in I don’t know how long,” said Trish Langhorn, a nanny shopping at a Ralph’s supermarket in Glendale. “I’ve been eating mashed potatoes and all kinds of creamy, dangerous food.”

For Marta, a Glendale day-care teacher who didn’t want her last name used, expensive indulgences have all but disappeared in the last month as concerns about personal security and the economy have run high.

“I only buy what I need, and that’s it,” she said while shopping at a Glendale Albertson’s. And her family has cut back on restaurant meals, mainly because she doesn’t feel like going out. “I’m just not in the mood to anymore,” she said. “All the tension has really changed things.”

Supermarket sales remained relatively constant after the Sept. 11 attacks, dipping a negligible 1.9% for the week ended Sept. 23, the most recent data available, from the same period last year, according to Information Resources Inc.

Sales of nonfood items dropped 6.5% the week ended Sept. 23 from the same period last year, as health-and-beauty purchases such as creams and cosmetics declined.

High-end restaurants have suffered the most of all food-service establishments, as consumers have decided to stick closer to home. Some have seen drop-offs in business of 40% or more, said Kristin Short of the California Restaurant Assn., especially those in hotels and heavy tourist areas.

For instance, Sabellas, a restaurant on San Francisco’s Fisherman’s Wharf, recently was forced to cancel its lunch service for the first time in the restaurant’s 75-year history.

At Pasadena’s Parkway Grill and Crocodile Cafe, business is off as much as 12%. Ducz, a sister restaurant in Pasadena that serves California/Asian fusion cuisine, is faring far worse. So its owners, Robert and Gregg Smith, are downshifting, changing the format to comfort foods such as pot roast, meatloaf and prime rib, and renaming it Smitty’s Grill in December.

“It’s a concept that’s just more viable in today’s economic situation,” Gregg Smith said.

The decline in travel and fine dining already has begun to take a toll on California wine makers and U.S. beef producers, who have a record number of cattle in feedlots now. Lower demand should bring the price of T-bones and other steaks down in coming weeks, an unexpected bonus for consumers.

Indeed, the only winners in the restaurant industry in the last month have been fast-food outlets and pizza joints, which are doing heavier business than normal as consumers get food to go, Short said.

“We’re just staying at home, watching a lot of TV,” said Shinobu Robertson, shopping with her 11-month-old son at a Ralph’s in Glendale. “We’re trying not to spend so much money.”

Consumers also appear to be scaling down their at-home entertaining.

One informal survey of 1,000 California shoppers by Walnut Creek, Calif.-based marketing firm Clarity Inc. showed that 91% of those who drink wine said they plan to switch to inexpensive wines because of the softening economy.

Steve Burd, chairman and chief executive of Safeway, the nation’s No.2 supermarket chain, noted the new frugality in the company’s third-quarter conference call.

“We’ve seen a dramatic shift out of red meat and into chicken; a major shift away from luncheon and deli meats to, believe it or not, peanut butter and jelly; and a large increase in meal stretchers,” such as potatoes, Burd said.

However, he said the consumer belt-tightening probably wouldn’t dampen his chain’s earnings.

Indeed, analysts and industry groups say supermarkets probably will make up the loss of revenue in additional volume as families continue to prepare more meals at home.

And some higher-end stores could benefit as more of their affluent customers, accustomed to eating out, pick up supermarket-prepared meals instead.

“For every one person who might trade down from prepared foods to pasta and sauce that they make themselves, there are two people who weren’t eating as many meals at home as they are now,” said Kevin Davis, president of El Segundo-based Bristol Farms.

And although consumers appear to be reining in their purchases and trading down to less expensive items, some grocers are betting on a bigger-than-normal holiday season.

“You don’t feel like partying. You feel like spending more quality time with family and friends, and that bodes well for food retailers this holiday season,” Davis said.