The spending gap between higher- and lower-income households is becoming more pronounced as food inflation reaches a 40-year-high. Lower-income households are adjusting to stretch their food dollars, cutting back on restaurant visits and modifying their at-home eating behaviors to save money.

Households earning less than $75,000 a year are eating 89% of their meals and snacks at home, according to The NPD Group, a market research company that recently merged with IRI. Those households are eating more frozen foods, like pot pies or breakfast sandwiches, and shelf-stable foods, like canned pasta or ramen noodles, than on average.

Lower-income households over-index in their consumption of frozen and shelf-stable products but under-index when it comes to eating fresh and more healthful foods. Four-in-ten adults in households earning less than $75,000 told NPD cost is a barrier to eating healthier foods. As an example, data from IRI show prices for refrigerated eggs are up 47% year-over-year, and prices for fresh citrus fruit are up nearly 30%.

Shoppers are stretching food dollars by buying private label or less expensive brands. For the most recent quarter ended in June, lower-income households used private label foods 26% more than higher-income households, according to NPD. Nearly half of low-income consumers plan to purchase more private label products than they did a year ago.

For the four weeks ended July 25, IRI found private label share grew the most in fresh eggs (up six percentage points), followed by sugar (up five percentage points), sour cream (up four percentage points) and bottled water (up four percentage points). Other categories seeing more private label purchases include shortening, oil, butter/butter blends, flour and frozen meat.

Inflation also is impacting restaurant and foodservice use. Per capita restaurant visits declined across all income groups during the first two years of the pandemic, but in the quarter ending in June this year, the decline was most pronounced in income groups under $75,000. Households earning less than $45,000 with children cut back five visits per person in the quarter, driving an overall 2% decrease in total restaurant visits versus a year ago. The impact spans all foodservice segments, with companies including Jack in the Box and Dine Brands Global reporting shifts in traffic across different income groups in recent earnings calls.

Dine Brands, the parent company of IHOP and Applebee’s, saw a decline in visits from guests making $50,000 or less in the most recent quarter but an increase in visits from guests earning $75,000 or more.

Some shoppers have cut out foodservice entirely. Around a quarter of families earning less than $45,000 told NPD they are not visiting restaurants at all due to budget constraints.