Restaurants contend that their prices are beginning to offer a better deal to consumers than grocery stores because of inflation, reports The Wall Street Journal.
Recent Labor Department data asserts that consumer prices at grocery stores increased 13.1 percent year-over-year in July, compared to restaurant prices’ 7.6 percent increase. This is the biggest inflationary gap between the two options since the 1970s, according to the report.
This gap has allowed restaurants across the country to communicate their value in advertisements. According to an analysis from ad-tracking firm iSpot, 58 percent of the most watched ads from top restaurant brands highlighted deals, prices, or rewards for the consumer, up from 46 percent at the beginning of the year.
Executives at Burger King, Mcdonald's, Cheesecake Factory, and Applebees have told investors that they believe customers are considering eating out to be more advantageous for their wallet than cooking at home, according to The Wall Street Journal.
Economist Paul Ashworth noted that grocery prices are more dramatically affected by raw ingredient cost changes than those of restaurants. “In recent months, we’ve had a perfect storm,” he said, referring to the war in Ukraine, this year’s avian flu outbreak in the U.S., and unexpectedly poor production for crops that have driven up ingredient costs. Full Story (Subscription Required)
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