By Dimitri Rhodes
(Reuters) -Dutch retailer Ahold Delhaize, owner of Food Lion and Giant stores in the United States, has found a silver lining from belt-tightening consumers. More are opting to cook at home as restaurant bills become too pricey.
Consumers, particularly in the lower-income category, are increasingly scouring for deals and avoiding dining out as economic uncertainty and sticky inflation prompt them to be more discerning in their spending patterns.
“If the out-of-home market is getting more expensive and not in line with budgets of households, people look for at-home consumption solutions,” Ahold CEO Frans Muller told Reuters on Wednesday after the company released its results.
The trend helped boost sales volumes, though pressure on prices weighed on profits.
Fast food chains, including McDonald’s, KFC-owner Yum Brands and Chipotle Mexican Grill, have flagged a slowdown in eating out as they roll out budget-friendly meal deals to boost foot traffic.
Muller drew a comparison to the COVID-19 pandemic, when Ahold had added a large number of products to cook and consume at home, boosting its sales volume.
“We have … a very strong relationship in the U.S. with DoorDash and Instacart, which roughly now represents 40% of our total online business and is growing fast,” Muller added during a call with analysts.
Consumers tend to prefer curbside pickups and ordering in to traditional restaurants and shops, as these options are more practical and perceived as cheaper.
Ahold reported a 1.9% rise in quarterly comparable sales in the U.S., where it generates more than half of its revenue. Operating income in the country fell 9.2% to 531 million euros ($615 million) in the same period.
“We have positive volumes across the U.S. business, which is a positive sign, but we’ve also worked quite hard for that – we invested in price, and in other attributes,” Muller said.
Ahold, which also operates the Albert Heijn and Delhaize chains in the Netherlands and Belgium, reported a profit margin of 4% for the second quarter, in line with market expectations.
It said a strong performance in Europe was offset by U.S. price reductions, which it plans to continue to draw value-conscious shoppers into its stores.
($1 = 0.8636 euros)
(Reporting by Dimitri Rhodes in Gdansk, additional reporting by Helen Reid, editing by Milla Nissi-Prussak)
