Inflation: Customers ‘are starting to be a little more frugal,’ Stew Leonard’s CEO says
As summer barbecues become more expensive, Stew Leonard Jr., president and CEO of Stew Leonard's, has noticed that consumer behavior is changing.
"We can tell customers are starting to be a little more frugal about their shopping list," said Leonard, who owns seven grocery store locations.
The average cost of a summer cookout for 10 people has risen to $69.98 this year, a 17% increase year-over-year, the American Farm Bureau reported.
And according to the latest consumer price index data, food costs are up 10.1% year over year as the Russian invasion of Ukraine and global supply chain snarls have led to price increases in a wide variety of groceries. Ketchup prices have spiked 21%, snacks are up more than 13%, hot dogs more than 10%, and ice cream prices have risen nearly 10%. Beer, meanwhile, has only increased about 4%.
Meat prices have been particularly hit hard: Ground beef prices are up 11.8% since 2021 while chicken drumsticks are up 38% and chicken breasts are up 24%, a Wells Fargo report found.
“For the first time in my life — and our family's been in the food business all my life, I grew up in it — I've never seen chicken prices be higher than ground beef prices at this time of the year," Leonard said. "And this year, they are. So we're seeing some little shifts. I'd recommend go for the hamburger, you know, rather than the chicken breast on the grill."
'There's still great value'
Leonard explained that although some larger grocery store chains have passed on inflation entirely, other stores like his have trimmed their margins and shouldered some of the increased costs.
“If myself, one of our farmers and suppliers, and a customer went out to dinner and the check comes, all three of us are throwing our credit cards in," he explained. "Our suppliers have eaten a little bit of it, we’ve eaten a little bit, and the customer is feeling it with some higher prices.”
He also pushed back against the notion that food costs are rising across the board — noting that his stores haven't raised beef prices yet.
"Some of these numbers that I'm hearing about that are reported across the country might relate to certain items, but they don't relate to everything in general," he said. "You know, we've had to raise prices about 5%. But there's still great value in the store, and there's great specials every week."
Pinched consumers can still find ways to save money, he said. For example, when given the choice of pre-cut produce or whole fruits and vegetables, opt for the latter.
Using corn as an example, Leonard said: “It's more expensive, obviously, for us to do it at Stew Leonard's, shucking it and packing it for you. But you'll save some money if you buy it [whole]. In other words, chop it yourself at home."
There may be some good news around the next grocery store aisle. The longtime CEO said he saw a resilient customer base over the Fourth of July weekend.
“I think there’s pent-up demand right now that we’re seeing out there," he said. "The same you’re seeing about travel in the airport. People are looking at COVID maybe a little bit just like the flu now and they’re just deciding I want to get out and really party and get together with my family and celebrate this country’s independence right now.”
Leonard also said he's starting to see lobster prices come down after two years, signaling that price appreciation could be easing.
"So I feel like the supply chain issues are starting to get worked out a little bit, and we’re starting to see some relief," he said. "There’s a light at the end of the tunnel.”
Dave Briggs is an anchor for Yahoo Finance Live.
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