Amazon Puts Restaurant Industry on Notice
Amazon.com Inc.’s offer to buy Whole Foods Market Inc. for $13.7 billion has obvious advantages for both parties. It rescues the organic-food chain from its activist investors and gives it more buying power. It strengthens the online giant’s position in groceries while providing a whole new source of data on shopping habits.
It’s also good news for customers. They can expect lower checkout bills at the stores often called Whole Paycheck for their pricey merchandise. A fierce, customer-focused competitor, Amazon will surely look for ways to drive down prices.
Not surprisingly, the first prices to fall on news of the deal were for supermarket stocks.
But the short-term losers may be restaurants. Lower Whole Foods prices would exacerbate a trend that already has the industry nervous: the growing gap between the cost of eating at home and going out.
The price of meals away from home rose 2.6 percent last year, while grocery prices fell 1.3 percent, reports the Bureau of Labor Statistics. The gap was especially wide for meat, poultry, and fish prices (down 3.5 percent, led by beef and veal, which were down 6.3 percent) and eggs (down a whopping 21.1 percent -- so much for breakfast out). Cheaper main dishes make it more likely that consumers will stay home.
“Consumers aren’t going to eat out less because peanut butter is cheaper, or because bananas aren’t as expensive. But they would choose to eat at home because they bought a package of steaks for a lower price,” observes Jonathan Maze, the senior financial editor of Nation’s Restaurant News.
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