Diners are skipping restaurants and making more meals at home as inflation trend inverts
By DAMIAN J. TROISE
Posted 9/26/24
Eating in is in and eating out is out. That’s the message that inflation-squeezed consumers have been sending to fast-food companies and other restaurants. Meanwhile food producers are benefitting …
You must be a member to read this story.
Join our family of readers for as little as $5 per month and support local, unbiased journalism.
Current print subscribers can create a free account by clicking here
Otherwise, follow the link below to join.
To Our Valued Readers –
Visitors to our website will be limited to five stories per month unless they opt to subscribe. The five stories do not include our exclusive content written by our journalists.
For $6.99, less than 20 cents a day, digital subscribers will receive unlimited access to YourValley.net, including exclusive content from our newsroom and access to our Daily Independent e-edition.
Our commitment to balanced, fair reporting and local coverage provides insight and perspective not found anywhere else.
Your financial commitment will help to preserve the kind of honest journalism produced by our reporters and editors. We trust you agree that independent journalism is an essential component of our democracy. Please click here to subscribe.
Need to set up your free e-Newspaper all-access account? click here.
Non-subscribers
Click here to see your options for becoming a subscriber.
Register to comment
Click here create a free account for posting comments.
Note that free accounts do not include access to premium content on this site.
I am anchor
Diners are skipping restaurants and making more meals at home as inflation trend inverts
A woman checks prices as she shops at a grocery store in Wheeling, Ill., Friday, Jan. 19, 2024. (AP Photo/Nam Y. Huh)
Posted
By DAMIAN J. TROISE
NEW YORK (AP) — Eating in is in and eating out is out.
That's the message that inflation-squeezed consumer s have been sending to fast-food companies and other restaurants. Meanwhile food producers are benefitting from more palatable prices in grocery store aisles.
Inflation has been easing broadly for more than a year now, and it's been cooling faster for grocery items since the middle of the year. The current trend marks a reversal from previous years when grocery inflation outpaced restaurants as food producers raised prices, often fattening their profit margins.
The shift has been weighing on McDonald's, Olive Garden owner Darden Restaurants, and similar chains.
Orlando-based Darden reported a 1.1% sales drop at restaurants open for at least a year. The decline was a more severe 2.9% at the Olive Garden chain. July was especially weak.
McDonald's reported a 1.1% drop for that same sales measure during its second quarter, compared with an 11.7% jump a year prior.
“You are seeing consumers being much more discretionary as they treat restaurants,” said McDonald's CEO Christopher J. Kempczinski, in a call with analysts following the earnings report. “You’re seeing that the consumer is eating at home more often. You’re seeing more deal seeking from the consumer.”
Both Darden and McDonald's are offering more bargains to entice cautious consumers. Olive Garden has brought back its “never ending pasta bowl," while McDonald's introduced its $5 value meal deal.
Consumers have been focusing more on groceries and eating at home, and that's driving sales volumes for companies like General Mills, which makes Cheerios cereal, Progresso soups and Haagen-Dazs ice cream.
“We did anticipate that might be the case as we see consumers taking value,” said General Mills CEO Jeffrey L. Harmening in a call with analysts. “Consumers are still economically stressed, so that played out the way we thought.”
General Mills and other food producers had raised prices to offset rising inflation, resulting in profit margin boosts for many of them. Now they are among food producers trimming some prices to ease the squeeze on consumers.
Grocery stores have also reaped more of the benefits from consumers dining at home. Kroger reported a 1.2% rise in sales at stores open at least a year during its most recent quarter. It expects it to rise 1.8% during its current quarter and 2.1% during the final quarter of its fiscal year.
“We are cautiously optimistic about our sales outlook for the second half of the year and expect customers to continue prioritizing food and essentials,” said Kroger CEO Rodney McMullen.