Credit Suisse analyzed the cost of feeding a family of four across its coverage universe and found that pizza chains offer the most affordable options, averaging $15 to $16.
And among the big pizza names, Domino’s Pizza Inc.
was the least expensive.
Credit Suisse conducted its research at a point where it says restaurant menu prices are reaching 40-year highs, coinciding with a high point for inflation rates.
At quick-service restaurants (QSR), the average cost to feed a family of four was $20 to $25, while at casual dining restaurants it was about $50. Among casual dining, Italian restaurants were the most affordable with Olive Garden, a Darden Restaurants Inc.
chain, and Carrabba’s, part of the Bloomin’ Brands Inc.
lineup, the most affordable.
To be sure, analysts say eating at home will always be less expensive than dining at a restaurant or ordering takeout. Credit Suisse estimates the cost for a meal for four prepared at home to cost between $10 and $30 while a restaurant will cost $24 to $60.
For example, ordering a large pepperoni pizza and an order of eight chicken wings will run about $26 while preparing that same meal at home with a frozen pizza, wings, sauce and spices can be as low as $10.
At an Italian restaurant, two orders of spaghetti and meatballs and two children’s plates will run about $46 while buying pasta, meatballs, broccoli and bread and butter to eat at home is about $13.
Still, Credit Suisse says Chipotle Mexican Grill Inc.
is a top choice for analysts.
“Based on our analysis of pricing across markets & customer demographics, we favor Chipotle given its strong pricing power, with prices just at the high end of QSR peers even with higher quality positioning & more affluent customer base (~52.5% of customers household incomes $80K+ versus QSR average ~42%),” analysts wrote in their report.
Steakhouses were usually the most expensive among the restaurants Credit Suisse examined, but Texas Roadhouse Inc.
usually came in as the least expensive in that category.
“We believe restaurants with more affluent customer bases likely have more pricing power and are better positioned to sustain demand in a more challenging consumer environment,” analysts said.
Shake Shack Inc.
which is increasingly heading to the suburbs to expand beyond urban areas, has the most affluent consumer base with 56.5% of customers earning $80,000-plus, followed by Chipotle (52.5%), Starbucks Corp.
(50%) and Papa John’s International Inc.
Analysts are starting to reassess the rest of 2022 and anticipate that lower-income shoppers will begin tightening their belts, with many trading down at the grocery store to value and private label brands.
“From a consumer prices perspective, inflation in the last year has been driven by goods rather than services,” wrote UBS analysts in a note examining pricing power around the globe.
“This is probably driven by both supply chain disruptions associated with the pandemic, but also due to a change in the consumption basket of households away from services and into goods.”
UBS analysts have suggested, in a separate note, that spending could shift again as consumers begin to travel and do other activities.