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Forget the fries and grab some frozen veggies – Walmart is seeing a surge in customers opting for groceries over fast food due to rising menu prices.
According to Walmart’s Chief Financial Officer, John David Rainey, a significant portion of the company’s recent sales growth can be attributed to shoppers seeking more affordable meal options. Rainey pointed out that eating out is typically “roughly 4.3 times more expensive” than eating at home. This price gap has only widened recently, with grocery prices remaining stable or even dropping on some items, while fast food menus have seen consistent increases.
Walmart reached new heights on Thursday as the chains stock reached a historical high beating out revenue expectations this past quarter. This news comes as McDonald’s and other fast food chains lost out with slumping sales and foot traffic.
This trend presents a golden opportunity for Walmart, the nation’s largest grocer. The company is well-positioned to capitalize on consumers looking to stretch their dollars further. Walmart’s commitment to affordability, with a large percentage of its products priced under $5, is particularly appealing to families seeking to fill their tables without breaking the bank.
Rainey spoke on an earnings call about the new brand on Walmart’s shelves called Bettergoods.The brand is being touted by the grocer as a better priced over fast food options. Described as a “premium” line that offers more flavors and options available for special diets like gluten-free and plant-based, it has an average price-point under $5.
McDonald’s new $5 value meal is poised to be in competition with Walmart but McDonald’s isn’t thinking long-term as the deal will only be live for one month. If they want to truly bring back customers, the burger chain is going to have to bite the bullet and come up with better solutions.
As the convenience of fast food is undeniable, the financial strain on wallets is becoming increasingly difficult to ignore. And grocery shopping is becoming the more economical option, we can expect to see more diners swapping out drive-thru visits for grocery aisles in the months to come.
