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Forget self-service. Walmart wants diners to find an affordable meal in the aisles of their supermarkets.
As fast food becomes more expensive, the country's largest grocer sees a sales opportunity.
In a call with CNBC on Thursday, Walmart Chief Financial Officer John David Rainey said some of the discounter's sales growth last quarter came from customers flocking to its supermarket aisles for groceries. Cheaper than what you can get at quick service restaurants.
“Eating out is approximately 4.3 times more expensive than eating at home,” he said. “And that benefits our business.”
As customers see some grocery items staying the same price or even getting cheaper, the gap between purchasing menu items and cooking food at home has widened even further, he said.
Walmart stock surged to a record high on Thursday, after beating Wall Street's quarterly revenue and sales expectations and saying it expected its full-year results to be at the high end or better than its previous forecast. Transactions in the US increased 3.8% as more customers visited its stores and website.
Walmart's strong store traffic and quarterly results are at odds with those of restaurant companies, including McDonald's, starbucks and Yum brands. Foot traffic to limited-service chains, which include fast-food restaurants and casual restaurants, fell 3.5% in the first quarter, according to Revenue Management Solutions. Restaurant executives blamed bad weather in January and February, and a slowdown in consumption, particularly among low-income diners.
Like many restaurants, McDonald's has faced backlash over its prices. An $18 Big Mac combo sold at one of its franchised restaurants in Connecticut went viral on social media, prompting executives to defend the chain's prices on their conference call. The burger giant reported disappointing US comparable sales growth of 2.5%, suggesting its in-person traffic fell during the quarter.
Still, McDonald's CEO Chris Kempczinski said consumers, particularly those with lower incomes, are looking for deals. The chain will offer a $5 meal starting June 25 for about a month.
Not all restaurants have had trouble getting diners to pay higher prices: fast-casual chains like chipotle, wings stop and sweet green all reported strong sales in their most recent quarters.
Inflation data from the U.S. Department of Labor reflects the difference between the price customers pay for food they cook at home or pack for lunch, compared to what they pay at a cafe or restaurant. In April, the price of food at home, a category that measures the total cost of food purchased at supermarkets or other grocery stores, increased 1.1% year over year. The price of food away from home increased significantly more: 4.1% year-on-year.
On the company's earnings conference call Thursday, Walmart US CEO John Furner pointed to a newer tool in Walmart's arsenal that it can use to compete more aggressively with restaurants: its new grocery brand, Bettergoods.
The premium line includes unique flavors and products designed for customers who are more health-conscious or have a special diet, such as gluten-free or plant-based products. For example, it includes Strawberries and Cream Greek Yogurt, Curry Chicken Patties, Restaurant-Style Chicken Wings, and Salted Caramel Oat Milk Ice Cream.
Seventy percent of the brand's items cost less than $5, Furner said, a price that can catch the attention of shoppers “trying to feed a family of four, five, [or] six.”
-CNBC Amelia Lucas contributed to this report.
