Restaurant Meals Become a Relative Bargain as Grocery Prices Soar

The unusual pricing dynamic has given ammunition to fast-food chains and sit-down restaurants, which are increasingly touting their prices and overall value in advertisements.

Executives at Burger King,

McDonald’s Corp.

MCD 1.27%

,

Cheesecake Factory Inc.

CAKE 0.56%

and Applebee’s have recently made the case to investors in presentations and earnings calls that they think customers increasingly consider eating out to be a better value than cooking at home.

“We need to be delivering great food and great service and great pricing even in a tough environment,” said

José Cil,

chief executive of Burger King owner

Restaurant Brands International Inc.

QSR 0.72%

An analysis of the most-watched ads across top restaurant brands found that 58% highlighted deals, prices or mobile app or loyalty rewards from May through early August, up from 46% from January through April, according to ad-tracking firm iSpot.

Wendy’s Co.

WEN -0.49%

and Burger King have advertised $5 meals this year.

Yum Brands Inc.’s

YUM 0.06%

Taco Bell, which is selling burritos and tacos for as low as a buck, said U.S. same-store sales rose by 8% during its last quarter in part thanks to low-cost offerings, executives said earlier this month.

More diners from households earning $75,000 and above are eating at

Dine Brands Global Inc.’s

DIN -0.40%

IHOP and Applebee’s locations, Chief Executive

John Peyton

said. New deals, including $1 shrimp and free breakfast for children, are helping attract new customers, he said.

Cooking at home is usually cheaper than eating out, and largely still is. Restaurants’ labor, rent and other expenses drive up the bill.

But the rise in the prices of retail food has Brooke Tucker, a 25-year-old barista from Durham, N.C., turning to fast food over groceries nearly daily. A full meal from KFC costs $7, she said, while a recent grocery run for chips, dip and sushi set her back $19.

“I literally cannot remember the last time I made myself a nice, home-cooked meal,” said Ms. Tucker, who added that she is concerned about rising food prices despite getting a higher-paying job recently. “Grocery prices are so high right now.”

U.S. consumers are navigating the steepest food inflation in more than 40 years.

Consumers’ grocery costs have risen by 10% or greater annually since March, the steepest jump recorded by the Labor Department since 1981. Year-over-year food prices have increased across nearly all categories.

Restaurant prices have also increased this year, but grocery prices are more affected by cost increases for raw ingredients than restaurants, where labor is the bigger factor, said

Paul Ashworth,

chief North America economist at research-firm Capital Economics.

The war in Ukraine, this year’s avian flu outbreak and unexpectedly bad production for crops including Florida citrus fruits have all increased ingredient costs, Mr. Ashworth said. “In recent months, we’ve had a perfect storm,” he said.

Grocers, food brands and meal-kit companies, meanwhile, are trying to argue that eating at home can be more affordable.

Grocer

Albertsons

ACI 0.07%

Cos. Inc. told investors last month it was rolling out prepared meals at more locations as an alternative to eating out. Discount chain

Grocery Outlet Holding Corp.

GO 1.85%

said last week that it is drawing new, discount-seeking customers.

Meal-kit company

Blue Apron Holdings Inc.,

APRN 18.37%

which delivers boxes of ingredients and recipes to people, is changing its advertising. It is highlighting that buying a Blue Apron kit for a salmon dish, for example, could cost less than buying the same ingredients from a supermarket, the company told investors earlier this month.

And food maker

Kraft Heinz Co.

KHC -0.09%

is trying to persuade consumers that its Kraft Mac & Cheese and other grocery items are a good deal in ways it hasn’t previously, CEO

Miguel Patricio

said. Fast-food chains such as Burger King have been better at that, he said.

“What we had never done before is communicate the value of our product,” Mr. Patricio said. “We are doing that now.”

Write to Heather Haddon at heather.haddon@wsj.com

The unusual pricing dynamic has given ammunition to fast-food chains and sit-down restaurants, which are increasingly touting their prices and overall value in advertisements.

Executives at Burger King,

McDonald’s Corp.

MCD 1.27%

,

Cheesecake Factory Inc.

CAKE 0.56%

and Applebee’s have recently made the case to investors in presentations and earnings calls that they think customers increasingly consider eating out to be a better value than cooking at home.

“We need to be delivering great food and great service and great pricing even in a tough environment,” said

José Cil,

chief executive of Burger King owner

Restaurant Brands International Inc.

QSR 0.72%

An analysis of the most-watched ads across top restaurant brands found that 58% highlighted deals, prices or mobile app or loyalty rewards from May through early August, up from 46% from January through April, according to ad-tracking firm iSpot.

Wendy’s Co.

WEN -0.49%

and Burger King have advertised $5 meals this year.

Yum Brands Inc.’s

YUM 0.06%

Taco Bell, which is selling burritos and tacos for as low as a buck, said U.S. same-store sales rose by 8% during its last quarter in part thanks to low-cost offerings, executives said earlier this month.

More diners from households earning $75,000 and above are eating at

Dine Brands Global Inc.’s

DIN -0.40%

IHOP and Applebee’s locations, Chief Executive

John Peyton

said. New deals, including $1 shrimp and free breakfast for children, are helping attract new customers, he said.

Cooking at home is usually cheaper than eating out, and largely still is. Restaurants’ labor, rent and other expenses drive up the bill.

But the rise in the prices of retail food has Brooke Tucker, a 25-year-old barista from Durham, N.C., turning to fast food over groceries nearly daily. A full meal from KFC costs $7, she said, while a recent grocery run for chips, dip and sushi set her back $19.

“I literally cannot remember the last time I made myself a nice, home-cooked meal,” said Ms. Tucker, who added that she is concerned about rising food prices despite getting a higher-paying job recently. “Grocery prices are so high right now.”

U.S. consumers are navigating the steepest food inflation in more than 40 years.

Consumers’ grocery costs have risen by 10% or greater annually since March, the steepest jump recorded by the Labor Department since 1981. Year-over-year food prices have increased across nearly all categories.

Restaurant prices have also increased this year, but grocery prices are more affected by cost increases for raw ingredients than restaurants, where labor is the bigger factor, said

Paul Ashworth,

chief North America economist at research-firm Capital Economics.

The war in Ukraine, this year’s avian flu outbreak and unexpectedly bad production for crops including Florida citrus fruits have all increased ingredient costs, Mr. Ashworth said. “In recent months, we’ve had a perfect storm,” he said.

Grocers, food brands and meal-kit companies, meanwhile, are trying to argue that eating at home can be more affordable.

Grocer

Albertsons

ACI 0.07%

Cos. Inc. told investors last month it was rolling out prepared meals at more locations as an alternative to eating out. Discount chain

Grocery Outlet Holding Corp.

GO 1.85%

said last week that it is drawing new, discount-seeking customers.

Meal-kit company

Blue Apron Holdings Inc.,

APRN 18.37%

which delivers boxes of ingredients and recipes to people, is changing its advertising. It is highlighting that buying a Blue Apron kit for a salmon dish, for example, could cost less than buying the same ingredients from a supermarket, the company told investors earlier this month.

And food maker

Kraft Heinz Co.

KHC -0.09%

is trying to persuade consumers that its Kraft Mac & Cheese and other grocery items are a good deal in ways it hasn’t previously, CEO

Miguel Patricio

said. Fast-food chains such as Burger King have been better at that, he said.

“What we had never done before is communicate the value of our product,” Mr. Patricio said. “We are doing that now.”

Write to Heather Haddon at heather.haddon@wsj.com