OPINIONOperations

Here’s another good excuse for a restaurant value war

Retail Watch: Grocers and big-box food retailers, already benefiting from being significantly cheaper than restaurants, are touting major price cuts this summer.
Walmart bettergoods
Walmart added a new store brand called bettergoods, billed as offering "chef-inspired" foods, with most items under $5. | Photo courtesy of Walmart

Retail Watch

McDonald’s and Burger King are introducing $5 value meals to an audience of diners who increasingly view fast food as a luxury.

And other restaurant brands are racing to compete with what’s expected to be a game of how-low-can-you-go pricing this summer.

But grocers and big-box food sellers, too, are getting in on the value war, slashing prices on items that already benefit from lower levels of inflation than restaurant food. Restaurant prices rose 4.2% for the year in April, far outpacing food retailers, which reported 1.2% inflation, according to U.S. Bureau of Labor Statistics data.

Retailers said they’re looking to reduce the cost of summer gatherings for consumers, the same shoppers who might be weighing whether to have that family get-together in the backyard or at a local restaurant.

Some recent examples:

  • Fast-growing grocer Aldi, already known for its low prices, last month said it would cut prices on more than 250 items through Labor Day, saving shoppers an estimated $100 million. That’s about $40 million more than the chain promised in savings through its deals last summer.
  • Target said it will reduce prices on about 5,000 frequently shopped products, including butter, spinach, sports drinks, frozen pizza and more.
  • Pittsburgh-based regional grocer Giant Eagle said last week it would lower prices on more than 1,000 seasonal items during an eight-week promotion, saving shoppers an estimated $7.5 million. Deals are focused on picnic must-haves and barbecue staples, the retailer said. Shoppers can save $2 off a four-pack of Beyond Meat burgers, $2 off a pack of Nathan’s Colossal Franks and more.
  • Walmart, the country’s largest grocery retailer, meanwhile, is out with a new store brand platform called “bettergoods” that promises “chef-inspired” foods like Creamy Corn Jalapeno Chowder and Bronze Cut Pasta from Italy. Most of the 300 bettergoods items are under $5. Walmart SVP for Private Brands, Food and Consumables Scott Morris said the new line represents “a commitment to our customers that they can enjoy unique culinary flavors at the incredible value Walmart delivers.”

No matter how (comparatively) cheap it is to buy food at the grocery store and cook it at home, there will always be restaurant occasions. But as the gap between food retailers and restaurants continues to widen, we may see those already dwindling occasions become even more limited.

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