Eating in is in and eating out is out. That's the message consumers have been sending to fast-food companies and other restaurants. Meanwhile, food producers are benefitting from more palatable prices in grocery store aisles.
Infl ation has been easing broadly for more than a year now, and it's been cooling faster for grocery items since the middle of the year. The current trend marks a reversal from previous years when grocery infl ation outpaced restaurants as food producers raised prices, fattening their profit margins.
The shift has been weighing on McDonald's, Olive Garden owner Darden Restaurants and similar chains. Orlando-based Darden reported a 1.1% sales drop at restaurants open for at least a year. The decline was a more severe 2.9% at the Olive Garden chain. McDonald's reported a 1.1% drop for that same sales measure during its second quarter.
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Consumers have been focusing more on groceries and eating at home, and that's driving sales for companies like General Mills, which makes Cheerios, Progresso soups and Haagen-Dazs ice cream. Kroger reported a 1.2% increase in sales at stores open at least a year for its most recent quarter.
NIKE: Nike sales and profits slumped in its fiscal first quarter as the sportswear giant wrestles with shoppers' sluggish demand for new sneaker models. The lackluster results Tuesday came after Nike said last month that its CEO, John Donahoe, is stepping down Oct. 13.
EUROPE: Infl ation in the 20 countries that use the euro fell to 1.8% in September, below the European Central Bank's target of 2% for the first time in more than three years, which may lead to faster interest rate cuts there.
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