Restaurants Can Be a Cheaper Option Than Inflationary Groceries

Restaurants Can Be a Cheaper Option Than Inflationary Groceries
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  • US consumers are experiencing the sharpest food inflation ever 40 years.
  • The inflation gap between restaurants and grocery stores has not been this wide since the 1970s.
  • Restaurant chains are betting that this will encourage Americans to eat out rather than cook at home.

The conventional wisdom is that skipping meals saves you money – but with inflation running rampant, easier meal choices can also be cheaper.

This is because consumer prices in grocery stores are increasing faster than in restaurants. they are increased According to the Labor Department, stores in July were up 13.1% year-over-year, but restaurants were only up 7.6%. This is the largest inflation gap between restaurants and grocery stores since the 1970s.

“Higher food inflation is positively associated with same-store fast-food sales because people see non-inflationary oases in value menus,” said Evercore ISI analyst David Palmer. awning Barron last week. Although restaurant prices have risen, fast food chains are still proving popular.

According to The Wall Street Journal, executives at McDonalds, Burger King, Cheesecake Factory and Applebee’s recently told investors in earnings calls and presentations that customers have more incentive to eat out these days. informed this week.

“We need to deliver great food, great service and great prices, even in difficult circumstances,” said Jose Gil, CEO of Restaurant Brands International, owner of Burger King. Cyl also informed Earlier this month, more Burger King customers are using coupons and loyalty rewards to subsidize meals.

The move toward bargaining at restaurant chains comes even as those chains are slashing the value of their offerings as inflation squeezes their budgets.

“We’ve seen companies completely transform their value menus,” said Michael Schaefer, global head of food and beverage at market researcher Euromonitor International. awning CNBC this month. “We’re just seeing fewer products, limited price increases, smaller items.”

Inflation is improving, but not grocery stores

Even if it’s less bang for your buck, restaurant chains are still betting on creating a more wallet-friendly alternative to eating at home — food prices still aren’t in a good place, even if the inflation outlook looks brighter lately.

US consumers are experiencing the sharpest food inflation ever 40 yearsThe annual increase in food costs of 10% or more since March is the largest increase recorded by the Labor Department since 1981.

Inflation cooled overall in July as gasoline prices fell, but remained high as consumer prices rose 8.5% from a year ago. The CPI food price index rose 1.1% on the month in July, up from June’s 1% gain. Food spending increased by 1.3%, accelerating from the previous month’s pace. While the outlook for some food crops, such as wheat and corn, has improved since last month, the latest CPI report suggests that food prices will not fall as quickly as gas prices. This was reported by Insider’s correspondent Ben Wink.

It’s changing the way Americans approach grocery shopping, if they even do it.

About 95% of US households he said According to a Numerator survey of more than 10,000 consumers in April, they were changing their shopping habits to account for inflation.

As of May request According to the Food Industry Association (FMI), 21% of consumers are buying less meat and 14% less produce. Some shoppers are swapping these expensive products for more frozen and canned meats, FMI said, with a higher percentage of shoppers with household incomes below $40,000 making the switch.

And the chains are betting consumers can find a way to operate the windows instead.

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