Gen Z, Millennials Splurge on Food as Confidence Increases

Younger shoppers are feeling good about spending more on groceries.

April 17, 2024

According to a spending report from McKinsey & Company, U.S. consumers are feeling a little more optimistic about the economy. Around 20% of consumers reported still feeling pessimistic about the economy, but the firm noted that this is the lowest reported pessimism rate since June 2022.

According to the report, “Trading down—or changing the type or quantity of purchases for better pricing and value—was still prevalent among consumers in February, although slightly fewer consumers reported trading down this month compared with the end of 2023.”

Forty percent of consumers expressed an intent to splurge over the next three months, which McKinsey & Company noted was a two percentage point increase from the end of 2023. However, the firm also stated that splurge items and experiences have changed.

More than a third of survey respondents said they expected to splurge on food. However, groceries slightly outpaced restaurants and dining out, with 37% of respondents planning to splurge on groceries and 36% planning to splurge on dining out. This trend, the firm said, was most evident among Gen Z and Millennials.

According to Business Insider, these younger cohorts ranked splurging on groceries higher than plans to splurge on any other category, including restaurants, bars, travel, beauty and personal care, apparel and fitness.

Gen Z tends to spend more on high-quality snacks and beverages, raising the price on their grocery bills. One 23-year-old Gen Zer told Business Insider that “he spends about $130 on groceries for a week and a half. ‘Fancy sodas and drinks’ and ‘random snacks at Trader Joe’s’ account for the bulk of the bill. He also said he spends about $35 on protein bars.”