Retailers, consumers and prices
Check out the latest raft of earnings and outlooks kicking off the holiday-shortened week in the consumer world.
Kraft Foods, which makes Oreo cookies and Velveeta cheese, posted quarterly revenue that fell short of expectations, but said its recent acquisition of British chocolatier Cadbury would accelerate long-term growth.
After a much heralded “shift to thrift” during what has become the longest and deepest recession since the Great Depression, diners are now saying they plan to spend less money at cheap fast-food chains and more at some pricier eateries like Darden‘s Red Lobster and Olive Garden chains, Chipotle and Maggiano’s Little Italy from Brinker.
“Trading up is supported by fewer customers saying they’re ordering less expensive items, skipping beverages and choosing less expensive restaurants,” RBC Capital Markets analyst Larry Miller wrote in a client note. Miller regularly polls diners about their spending plans.
Whether it is “value menus,” Applebee’s two dinners for $20 deal or Ruth’s Chris Steak House’s “Summer Classic” three-course meal for $39.95, restaurant operators long have been depending on specials to woo customers during a long recession that has driven unemployment to a 26-year high.
Now, one high-profile restaurant executive says he has seen some rivals’ deep discounts disappear over the last few weeks.
Frozen seafood is never as tasty as fresh, a problem Red Lobster, whose menu hosts various fried frozen fish dishes, is trying to overcome.
Following a quarter of disappointing sales at its Red Lobster restaurant chain, Darden is trying to change the ”perception that the menu at Red Lobster is primarily comprised of frozen seafood prepared in a fried manner and not having a lot of interesting innovation, flavor profiles, culinary expertise,” said Darden’s CEO Clarence Otis on a call with analysts.