The Earnest Files: Omicron Edition

Using data powered by Earnest Research, we can draw some conclusions throughout the latest Covid-19 waves on consumer behavior going forward.

Report summary

  1. Foodservice demand is demonstrating excellent resilience. Despite surging inflation and record-setting Covid cases, foot traffic increased in December and January.
  2. Where consumers previously grabbed breakfast on-the-go, they now pop out for lunch while at home, and there are somewhat fewer evening dinners and drinks, so long as people are working from home.
  3. Inflation is driving consumers to discount grocers, driving growth in share of traffic.

Foodservice: More Resilience in Demand, and for Lunch in Particular

Foodservice sales have fully recovered, showing the first signs of ’living with Covid’. As Omicron ripped through the US in December and January, restaurant foot traffic grew (0.3% in January 2022 versus January 2020). This is impressive considering inflation was 12.5% higher than in January 2020. However, asymmetry amongst restaurants remains. Both casual and fast-casual dining suffered. We are hearing anecdotally that customers have quickly returned to dining in. Looking ahead, as Covid cases continue to wax and wane, patrons will increasingly become less fearful and the rise and fall in dine-in demand will lessen, to a degree where it becomes a negligible shift in demand. 


There has also been a shift in time of day for patrons’ visits. Earnest data indicates that morning and night demand have seen a noticeable softening over the last 12 months compared to pre-pandemic levels, meanwhile, lunch demand has grown. Work from home creates fewer occasions to grab food on the way to work. Similarly, there are fewer opportunities for post-work occasions, a shift that hurts the bottom line2. Afternoon and midday demand have both grown the most over the last 12 months, 9.1% and 6.2%, respectively.


The implications of permanent work-from-home arrangements  will consolidate the recent trends we have observed in the coming year. Shifting hours of demand are impacting working capital costs such as staffing, inventories, and utilities. Successful restaurants have optimized these dynamics: operating at 80% to 90% regular staff and simpler menus are two examples of reduced costs that have helped bottom lines. 

Optimized cost structures, inflation pass-through, and growing demand have helped restaurants turn the corner in 2021. Franchisees are fairing well, according to McDonald’s, they posted record cash flows in Q4. 

Food Retail: Consumers Are No Longer Afraid of In-person Shopping

Consumption of food at home has sustained strong demand above pandemic levels, bolstered by higher average spend (inflation included), the return of in-person shopping (to 2019 levels), and structurally higher online grocery orders.

Foot traffic at brick-and-mortar grocery stores has effectively recovered in the past two months
(-0.2% and -0.6% in December and January, respectively, compared to two years ago). This is despite the explosion in new virus cases spurred by the Omicron variant, suggesting the average consumer is no longer afraid to peruse physical grocery aisles.

Moreover, foot traffic recovery signs can be seen in March and April 2021 as cases dropped. It was temporarily halted during summer when stimulus checks and reopening of the economy drove a shift of food consumption back to restaurants, as seen in our foodservice analysis.


Discount grocers have consistently gained traffic share, especially in the fourth quarter. Increased inflation and lower fear of in-person shopping are likely to have pushed more consumers to discount retailers. On the opposite end, foot traffic at premium and natural stores remains far from the good old times; it has been offset by a 25% more expensive average shopping basket than pre-Covid (January 2019), the highest price increase of all.
The consolidated average transaction amount per visit sustained 16% above pre-Covid levels despite flat traffic. Average transactions reached Covid minimums in September, on the back of summer’s ‘reopening’. Transaction sizes expanded again during the holidays, but have quickly reverted to 2021 levels in January. 


Online groceries seem to have reached a steady cap of 2.8 orders per month per active client, still significantly above pre-pandemic levels but below the levels of the initial months of hoarding. The average order amount is 16% higher than pre-pandemic, as clients add more items to their virtual carts. 

Looking forward, as we learn to live with the virus and restrictions are lifted, the findings above support a picture of what is next for food retail. The additional market for food retail created by increased meals at home has been shared between brick-and-mortar and emerging online players. It is remarkable how Americans have discovered discount grocers, ostensibly pushed there by inflation and new store openings. Meanwhile, premium and natural stores reevaluate their relevance after the Covid-led changes in habits and demographics. On the virtual aisle, sales endurance attests e-grocery is here to stay. Despite an apparent cap on purchase frequency, online grocers have successfully managed to increase the average basket size and support much-needed profitability in the category.


[[1] Delta and Omicron.

[[2] Restaurants can make considerable margins on alcohol sales, and with less demand in the evenings, the bottom line of restaurants can suffer.

[[3] Many corporate businesses are offering employees permanent work-from-home or hybrid options, indicating a share of office work is unlikely to return to offices.