From the New York Times this morning:
“For years, food companies and restaurants generally raised prices in small, incremental steps, worried that big increases would frighten consumers and send them looking for cheaper options. But over the last year, as wages increased and the cost of the raw ingredients used to make treats like cookies, chips, sodas and the materials to package them soared, food companies and restaurants started passing along those expenses to customers.
“But amid growing concerns that the economy could be headed for a recession, some food companies and restaurants are continuing to raise prices even if their own inflation-driven costs have been covered. Critics say the moves are all about increasing profits, not covering expenses.”
The Times goes on: “So far, food companies and restaurants have been able to raise prices because the majority of consumers, while annoyed that the trip to the grocery store or drive-through for takeout costs more than it did a year ago, have been willing to pay. But there are plenty of shoppers, including those with lower incomes or retirees on fixed budgets, who say the higher prices have led to changes in their routines … In grocery stores, consumers began increasingly switching to less expensive store brands in March, executives at TreeHouse Foods, a company that makes cookies, crackers, pickles and beverages for retailers, told Wall Street analysts on a call in August.”
KC’s View:
I have to think – in fact, I hope – that the companies taking advantage of their customers, feathering their own nests at a time when a lot of people are struggling, end up having to deal with consumer blowback.
I have no problem with companies doing their best to cover their costs by raising their prices. But if you use the moment to exploit customers in an effort to increase your own numbers, raise your stock price and – not coincidentally – increase your own compensation, then I sort of have a problem with you.
On the other hand, if you are a company that understands that you are best served by being perceived as an agent for the consumer, then I’m on your side.
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