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Food Spending Turns Anorexic
Restaurants, name-brand food hit hard as diners opt for cheaper fare
By Clay Dillow
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Posted Feb 13, 09 9:36 AM CST
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(Newser)
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Americans have trimmed their food spending sharply, hitting restaurants, food retailers, and brand-name food producers squarely in the gut, the Wall Street Journal reports. In the last quarter of 2008, spending on food plunged an inflation-adjusted 3.7% from the previous quarter, the steepest decline since the government began keeping tabs 62 years ago, as consumers opt for generic items and dig deep into their own pantries.
Kraft Foods trimmed its annual earnings forecast last week, and on Tuesday Citi Investment Research warned of a modern-day “price war” as Wal-Mart prepares to revamp its Great Value private-label foods and trim national brand prices, pushing competitors to do the same. Restaurants have it even worse, with chains like Starbucks and Ruby Tuesday shuttering hundreds of locations as same-store sales plunge.