Walmart Gains Customers Frustrated With Fast-Food Prices

Customers are cooking at home more as grocery prices go down and fast-food prices stay up.

May 22, 2024

In its recent first quarter earnings call, Walmart reported that its comparable-store sales in the United States rose 3.8% from the quarter a year earlier, and its U.S. e-commerce business jumped 22%, reported the New York Times.

“Transactions were up 3.8%, while the average ticket price showed that with each visit people were spending about the same as they did this time last year. Walmart’s quarterly profit, of $5.1 billion, was triple the result a year earlier,” wrote the Times.

Additionally, Walmart said that consumers from “upper-income households” helped it to gain market share, continuing a trend that began a couple years ago with high inflation.

However, the rise in upper-income customers is not the only reason for Walmart’s growth in the first quarter. During an interview with CNBC, Walmart Chief Financial Officer John David Rainey said that some of the sales growth can be attributed to customers who decided to save money by buying groceries to make meals at home instead of going to a QSR as fast-food prices increase.

“It’s roughly 4.3 times more expensive to eat out than it is to eat at home,” he said. “And that’s benefiting our business.”

“Restaurants could face a challenging few months as grocers lower their prices. Retail food prices declined 0.2% in the first quarter. At fast-food restaurants they increased 0.4%, the second straight month such prices accelerated after showing signs of slowing earlier in the year,” reported Restaurant Business.

Earlier this month, NACS Daily reported that McDonald’s is implementing a $5 meal that will offer a choice of a McChicken, McDouble, or four-piece Chicken McNuggets, along with fries and a drink. The deal comes as part of a move to entice more cost-conscious consumers.

Following the McDonald’s deal announcement, Wendy’s launched a $3 breakfast combination meal this week that includes a small portion of seasoned potatoes and a choice of either a bacon, egg and cheese English muffin or a sausage, egg and cheese English muffin.