Getty Images (left) | Reuters(R)
Forget about drive-thrus. walmart wants diners to find great value meals in the grocery store aisles.
As fast food prices soar, the nation’s largest grocers see an opportunity.
Walmart Chief Financial Officer John David Rainey said on a call with CNBC on Thursday that part of the discounter’s sales increase in recent quarters was due to people seeking cheaper meals than eating at quick-service restaurants. He said the incident was caused by a customer visiting the grocery store aisle.
“Eating out is about 4.3 times more expensive than eating at home,” he said. “And it’s benefiting our business.”
He said the gap between buying menu items and cooking at home is widening as customers see prices for some groceries remaining the same or even cheaper. Ta.
walmart stock The company soared to record highs on Thursday after it beat Wall Street’s quarterly sales and earnings estimates and said it expects full-year results to be at or above the high end of previous estimates. U.S. transaction volume increased 3.8% as more customers visited its stores and website.
Walmart’s strong store traffic and quarterly results are at odds with the performance of restaurant companies, including: McDonald’s, Starbucks and yum brand. Foot traffic to limited-service chains, which include fast food and fast-casual restaurants, fell 3.5% in the first quarter, according to Revenue Management Solutions. Restaurant executives blamed bad weather in January and February and weak spending, especially among low-income customers.
Like many restaurants, McDonald’s is facing a backlash over its prices.$18 Big Mac combo sold at franchised restaurant in Connecticut I got a virus On social media, executives urged a conference call to defend the chain’s pricing. The burger giant reported a disappointing 2.5% increase in U.S. same-store sales, suggesting that customer traffic fell during the quarter.
Still, McDonald’s CEO Chris Kempczinski said consumers, especially low-income families, are looking for bargains. The chain will be offering meals worth $5 for about a month starting June 25th.
Not all restaurants have a hard time getting customers to pay higher prices. chipotle pepper, wingstop and sweet green All companies reported strong sales in the most recent quarter.
Inflation data from the U.S. Department of Labor reflects the difference in the price customers pay for food they prepare at home or pack for lunch versus the price they pay at a coffee shop or restaurant. As of April, household grocery prices, a category that measures the total cost of food purchased at grocery stores and other grocery stores, were up 1.1% from the same month last year. Food prices away from home increased by a significant 4.1% year-on-year.
On Thursday’s earnings call, Walmart US CEO John Farner pointed to a new tool Walmart has available to compete more aggressively with restaurants: its new Better Goods grocery brand.
The premium line includes unique flavors and products created for more health-conscious customers or those on special diets, such as gluten-free and plant-based products. Examples include strawberry and cream flavored Greek yogurt, curry chicken empanadas, restaurant-style chicken wings, and salted caramel oat milk ice cream.
Furner said 70% of the brand’s items are under $5, a price point that “could appeal to shoppers who are trying to feed a family of four or five.” [or] Six. “
— CNBC Amelia Lucas contributed to this report.
