Grocery Price Increases Outpace Rising Costs of Eating Out

Grocery Bills’ 13% Pop

The cost of living is way up, and food is a big reason why. However, not all categories of this non-discretionary expense have seen commensurate increases. Grocery store prices have increased by 13.1% for the 12 months ending in July. Conversely, restaurant prices have risen by just 7.6%. This is partly explained by restaurants’ cost of labor trailing the price increase in raw ingredients.

Many factors are contributing to the high cost of food, including the Russia-Ukraine war, the avian flu, and poor crop production.

Opportunistic Messaging

Americans have seen the cost of groceries surge by at least 10% since March — the biggest jump since 1981. Restaurants like McDonald’s (MCD), Cheesecake Factory (CAKE), and Burger King (QSR) see opportunities in the current pricing landscape. All three are touting their meals as the value option compared to eating at home. This message is being conveyed both to investors during earnings calls and in advertisements to consumers.

Ad-tracking firm iSpot noted that most top restaurant brands were promoting value, be it on price or loyalty rewards in the May through early August period. Many of these restaurants attempted to woo customers with offers of meals for $5 or less.

Grocers’ Rebuttal

Companies that target the eat at home market are making the case that homemade meals can be affordable. Blue Apron (APRN), which delivers meal kits to consumers, has reformulated its messaging to convey the cost savings relative to buying the same ingredients at the local grocer.
Likewise, Kraft Heinz (KHC) is advertising their products as good bargains.

Some Americans are sticking with home-cooked meals but changing where they shop. Grocery Outlet (GO) reported an uptick in new customers on the hunt for discounts.

Ultimately, food is an essential expense. Whether you’re shopping at the grocery store or eating out more, here are 30 ways you can save more on your food purchases.

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James Flippin ABOUT James Flippin James Flippin is the son of a financial advisor who grew up hearing and learning about bond yields, interest rates, the stock market, and the ins and outs of Wall Street. After stints as a licensing and business broker for Marcus and Millichap in New York City, James moved into broadcasting and became a reporter and anchor. He covered crime, politics, finance, and tech at NBC News Radio while working part-time as a producer for SiriusXM. James graduated from the University of Delaware with a bachelor’s degree in political science and economics. He's also an accomplished podcaster with over 10-years of experience.

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