As the price of fast-food continues to surge, Walmart appears to be drawing value-hungry diners to its grocery aisles on the hunt for cheaper meals.
On an earnings call on Thursday, Walmart Chief Financial Officer John David Rainey said some of the company's growth in the latest quarter came from customers who turned down its grocery aisles instead of going through a drive-thru.
"It's roughly 4.3 times more expensive to eat out than it is to eat at home," he said, according to CNBC. "And that's benefiting our business."
He added that the gap between buying items from a menu board and cooking meals at home has grown even wider as customers see some grocery prices stay the same or get cheaper.
After beating Wall Street's quarterly sales and revenue expectations, Walmart's stock hit an all-time high on Thursday and the company said its full-year results were expected to be on the high end of, or better than, what it initially predicted. According to CNBC, transactions in the United States rose 3.8%, as traffic to its stores and website increased.
Many restaurant companies, like McDonald's, Starbucks, and Yum Brands, have had a harder time bringing in customers, however. According to Revenue Management Solutions, foot traffic to limited-service chains, which includes fast-food and fast-casual restaurants, plunged 3.5% in the first quarter. CNBC reported that restaurant executives attributed the drop-off to a consumer slowdown, especially among lower-income diners, as well as bad weather in January and February.
Long a mainstay for cheaper food options, McDonald's has faced consumer backlash to its recent price hikes. In Connecticut, a Big Mac combo sold at one of its franchised restaurants went viral on social media for its $18 price point, causing McDonald's executives to defend the item's pricing on a conference call. The iconic burger chain reported same-store sales growth of 2.5%, missing projections of 2.6%, according to CNBC.
McDonald's CEO Chris Kempczinski said the company has to be "laser-focused" on affordability to attract price-conscious customers and is working on a $5 value meal that will be offered for a month starting June 25.
In a bright spot for restaurants, fast-casual chains Chipotle, Wingstop, and Sweetgreen all reported strong results in their most recent quarter.
On the Thursday call, Walmart U.S. CEO John Furner brought up the discount retailer's new grocery brand, Bettergoods, which it can leverage in its competition with restaurants for consumer dollars.
Furner said 70% of the brand's items are less than $5, which might turn the heads of shoppers "trying to feed a family of four, five, [or] six."
Among the premium line's new offerings are unique flavors and items for customers with gluten-free or plant-based dietary needs. CNBC reported some of the items include strawberries and cream-flavored Greek yogurt, curry chicken empanadas, restaurant-style chicken wings, and salted caramel oat milk ice cream.
Nicole Weatherholtz ✉
Nicole Weatherholtz, a Newsmax general assignment reporter covers news, politics, and culture. She is a National Newspaper Association award-winning journalist.
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