Brands vs Restaurants

The Lempert Report
September 22, 2022

Phil: Also when we look at food service, The Wall Street Journal reports, that while grocery prices were up 13.1% from the month before, restaurant prices only went up 7.6%. So basically what, especially fast food restaurants are now saying, "Hey, come to us, it's cheaper than making your food at home". And in fact, 58% of the TV ads, not only TV ads, but all kinds of ads that happened in August were all about special offers, discounts, mobile app, or loyalty benefits. That's between may and August of this year. Restaurant business magazine shows that 80% of US consumers are eating out less. That certainly is hurting the food service business. 75% said, they're going to bars less often. So when we look at this battle between grocers saying "eat at home, you can save money", fast food restaurants saying, "forget that, come to us, you're gonna save more money". What's up?

Sally: Yes. And I think the restaurant industry was hit in such a tremendously challenging way because of the pandemic. And even though they adjusted into curbside and delivery, a lot of them, you know, we saw a lot of restaurants close. And so I'm sure that they are offering deals and not raising their prices as much because they are trying to get those customers back and recover from this situation. But the other thing is, that I think, yes, there's a real disconnect here to maybe we're not messaging enough to people how they can affordably eat at home. You know, there's an example in this article that we read of someone saying I went to a KFC meal costs $7 and her grocery bill compared to that, would've been $19 is what she found. So, there's a problem there in us showing how to shop so that they can make things for less at home. And then there's this problem of cheap, fast food that also is making us not eat well. 

Phil: Exactly. And, also when we compare, you know, the price of KFC to the $19 grocery bill at home, let's not forget that the $19 does not include your time to make that meal itself. Exactly. If you include that, you know, it's a much, it's a much worse situation. And to your point as far far as the quality of food, certainly there's gonna be a difference between going to a fast food restaurant and making it at home yourself. One of the good things about the pandemic is it really ramped up everything that we know in grocery, in food service, as it relates to technology.