A recent survey conducted by Morgan Stanley has revealed that individuals who are taking weight loss and diabetes medications called GLP-1s are reducing their expenses on restaurants and takeout. The survey found that most people taking these medications are spending less on eating out at restaurants and ordering takeout, while a smaller percentage are tightening their budgets when it comes to grocery shopping.
The increasing demand for GLP-1s is expected to continue, with Morgan Stanley analysts estimating that the market for these drugs will be worth $105 billion by 2030. They also predict that around 31.5 million people in the U.S., or approximately 9% of the population, will be taking GLP-1s by 2035.
The survey results suggest that GLP-1 drugs have a significant impact on consumer behavior and spending habits. As more individuals start using these medications, their impact across various consumer sectors is expected to increase. This could potentially affect the revenue of restaurant companies and manufacturers of packaged snacks.
However, Morgan Stanley analysts believe that GLP-1s pose a manageable long-term pressure on restaurants rather than an existential risk. They argue that restaurants offer convenience and experience in addition to food, which will not change with the usage of GLP-1s. However, some restaurants may need to adapt to the growing health-conscious consumer behaviors.
According to Morgan Stanley, fast-casual restaurants and coffee chains like Cava, Chipotle, Sweetgreen, and Starbucks are better positioned to manage the increasing use of GLP-1s. On the other hand, domestic service restaurants and “more indulgent” fast-casual restaurants may face more pressure. The survey also identified Hershey as the most at-risk among packaged food companies due to its American consumer-focused snacking portfolio.
In terms of beverage companies, those that produce alcoholic drinks are considered to be at the highest risk. This includes companies like Molson Coors, Boston Beer, Constellation Brands, and Diageo. On the other hand, companies that offer healthy foods are expected to benefit from the increased use of GLP-1s.
The survey conducted by Morgan Stanley involved 300 consumers who are currently taking GLP-1 drugs. The participants, who are described as being “early in their weight loss journey,” reported substantial changes to their diets and spending habits. The majority of consumers said they were spending less on eating out at restaurants and ordering takeout since starting a GLP-1 medication.
The survey also found that consumers tended to stick with the same restaurant but changed the types of meals they ordered. Many participants reported finishing less of the food they ordered in one sitting when dining out and ordering smaller portions overall.
The survey also highlighted changes in food consumption since starting GLP-1 medications. Roughly half of the participants reported cutting consumption of regular sodas, alcohol, and salty snacks by 50% or more. A significant number of participants also reported reducing or stopping alcohol consumption entirely.
Based on the survey results, Morgan Stanley forecasts a decrease in consumption of certain foods and beverages by 2035. Items like ice cream, cakes, cookies, candy, chocolate, frozen pizzas, chips, and regular sodas could see a 4% to 5% decrease in consumption. Alcohol, frozen popcorn or pretzels, crackers, cereals, cheese, gum or mints, and energy drinks are also expected to see a roughly 3% decrease in consumption.
It is important to note that the survey also found a decline in smoking traditional cigarettes and e-cigarette use among participants after starting a GLP-1 medication. However, Morgan Stanley remains cautious about drawing conclusions regarding the impact of these medications on addictive behaviors.
Overall, the survey results indicate that individuals taking GLP-1 medications are making significant changes to their diets and spending habits. The increasing use of these medications is expected to have an impact on the restaurant industry and manufacturers of packaged snacks. However, it is believed that these changes can be managed by restaurants and that healthier food options may benefit from the growing use of GLP-1s.
