Analysts say it’s the cheapest restaurant option to feed a family of four
Credit Suisse analyzed the cost of feeding a family of four in its coverage universe and found that pizza chains offer the most affordable options, averaging $15 to $16.
And among the big names in pizza, Domino’s Pizza Inc. DPZ,
was the cheapest.
Credit Suisse conducted its research at a time when it says restaurant menu prices are reaching 40-year highs, coinciding with a peak in inflation rates.
At quick-service restaurants (QSRs), the average cost to feed a family of four was $20 to $25, while at casual restaurants it was around $50. Among casual restaurants, Italian restaurants were the most affordable with Olive Garden, a Darden Restaurants Inc. DRI,
and Carrabba’s, part of Bloomin’ Brands Inc. BLMN,
range, the most affordable.
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True, analysts say eating at home will always be cheaper than eating out or ordering takeout. Credit Suisse estimates that a home-cooked meal for four costs between $10 and $30, while a restaurant costs between $24 and $60.
For example, ordering a large pepperoni pizza and an order of eight chicken wings will cost around $26 while preparing the same meal at home with frozen pizza, wings, sauce and spices can cost as little as $10. $.
At an Italian restaurant, two orders of spaghetti and meatballs and two children’s plates will cost around $46 while buying pasta, meatballs, broccoli and bread and butter to eat at home costs around $13.
Yet Credit Suisse says Chipotle Mexican Grill Inc. CMG,
is a top choice for analysts.
“Based on our analysis of market pricing and customer demographics, we favor Chipotle given its strong pricing power, with pricing fair at the high end of QSR peers, even with better positioning. quality and a more affluent customer base (~52.5% of household income of $80,000+ customers vs QSR average ~42%),” the analysts wrote in their report.
Steakhouses were generally the most expensive among the restaurants reviewed by Credit Suisse, but Texas Roadhouse Inc. TXRH,
were generally among the cheapest in this category.
“We believe restaurants with a more affluent clientele likely have more pricing power and are better positioned to support demand in a tougher consumer environment,” the analysts said.
Shake Shack Inc. SHAK,
which is increasingly moving to the suburbs to expand beyond urban areas, has the most affluent consumer base with 56.5% of customers earning over $80,000, followed by Chipotle (52.5 %), Starbucks Corp. SBUX,
(50%) and Papa John’s International Inc. PZZA,
Analysts are beginning to reassess the remainder of 2022 and predict lower-income shoppers will begin to tighten their belts, with many grocery shopping switching to value and private label brands.
Read: Low-income consumers will start tightening their belts on private label products in 2022, analysts say
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“From a consumer price perspective, inflation last year was driven by goods rather than services,” UBS analysts wrote in a note examining pricing power around the world. .
“This is likely due both to supply chain disruptions associated with the pandemic, but also to a shift in the household consumption basket away from services and towards goods.”
UBS analysts suggested, in a separate note, that spending could change again as consumers start to travel and do other activities again.