Walmart CFO: Shoppers Replacing Fast Food With Groceries

Walmart’s grocery business is reportedly benefiting from the high price of fast food.

The retailer’s chief financial officer, John David Rainey, told CNBC Thursday (May 16) that it’s “roughly 4.3 times more expensive” to buy a meal at a quick-service restaurant (QSR) than it is to purchase the ingredients needed to make a meal at home.

“And that’s benefiting our business,” he said, per the report.

Rainey added that the gap between the two prices is widening because some grocery items are holding their price or becoming cheaper, according to the report.

This news comes on the same day that Walmart reported better-than-expected first quarter earnings.

During the company’s quarterly earnings call held Thursday, both Rainey and Walmart CEO Doug McMillon attributed consumer spending increases seen during the quarter to the retailer’s value proposition.

McMillon said during the call: “We have almost 7,000 [price] rollbacks. That’s really helping. In our food categories, we see an even larger spread between eating at home, preparing meals at home, and eating out, which we think can help Walmart over the remainder of the year.”

Across the economy, there have been signs of pullbacks in “nice-to-have” items, with consumers choosing to save dollars on those items and earmark them instead for essential goods and services.

For example, Starbucks saw headwinds from repeat business from occasional customers; and comp sales were down by 4%. Similarly, QSRs have seen some headwinds as disposable income has waned.

PYMNTS Intelligence has found that consumers are also rethinking their nonessential spending amid ongoing high prices at the grocery store.

Sixty-eight percent of consumers who live paycheck to paycheck and have trouble paying their bills say they have found themselves making tradeoffs between “essential” items and those they see as “nice-to-have,” according to “The New Reality Check: The Paycheck-to-Paycheck Report.”

As for QSRs, it was reported Friday (May 10) that McDonald’s is encouraging franchisees to vote to implement a $5 meal deal to bring back customers who have left because of high prices.

McDonald’s CEO Chris Kempczinski said during the company’s latest earnings call that the company had to focus on affordability and that the firm currently doesn’t have a “national value platform.”

The post Walmart CFO: Shoppers Replacing Fast Food With Groceries appeared first on PYMNTS.com.