10:41 AM EDT, 09/13/2024 (MT Newswires) -- Kroger ( KR ) is seeing more customers return to grocery aisles as the cost of food at home rises at a slower pace than the price of meals at restaurants, Chief Executive Officer Rodney McMullen said.

The price of food at home in August was flat, while food away from home rose 0.3% from July, Labor Department data showed. At-home food prices in the 12 months ended August gained 0.9%, while the cost of meals in restaurants jumped 4%.

Kroger ( KR ) has seen an increase in budget-conscious customers amid a decline in savings that surged during the pandemic, higher interest rates and inflation, McMullen said Thursday on an earnings call, according to transcripts from FactSet. Even holdouts that have been eating at restaurants are returning to grocery aisles as the cost of preparing a meal is about a fourth of the price of dining out, he said.

"The punchline is it is less expensive to eat at home by a decent margin," said Joseph Feldman, a senior managing director at Telsey Advisory Group.

Excess savings in the U.S. peaked at about $2.1 trillion in August 2021, but that dropped at an average pace of about $70 billion a month through last fall before accelerating to $85 billion a month, according to a report from the Federal Reserve Bank of San Francisco. That, along with inflation, has left consumers opting to stay at home for meals, McMullen said.

Kroger ( KR ) on Thursday reported fiscal Q2 adjusted earnings of $0.93 a share, down from $0.96 a year earlier. Analysts polled by Capital IQ expected $0.91. Revenue in the quarter ended Aug. 17 was $33.91 billion versus $33.85 billion a year earlier. Analysts expected sales of $34.12 billion. The supermarket chain reaffirmed its guidance for fiscal 2024 adjusted net earnings per diluted share of $4.30 to $4.50. Analysts expect EPS of $4.44.

The company employs 414,000 people and has a market capitalization of $37.4 billion, according to data from FactSet.

Kroger ( KR ) is still expecting its merger with Albertsons ( ACI ) to be approved, McMullen said. Kroger ( KR ) recently extended the expiration date for offers to exchange outstanding notes of Albertsons ( ACI ), and in late August priced an offering for $10.5 billon in senior unsecured notes with net proceeds to be used to partly fund the acquisition.

The Federal Trade Commission is attempting to block the merger, saying it will reduce competition and lead to higher prices for already cash-strapped consumers. McMullen has said the merger would instead create more competition with Walmart ( WMT ) , the world's largest retailer.

Telsey's Feldman said in an interview with MT Newswires that Walmart's ( WMT ) prices are the lowest in the industry, while Kroger's ( KR ) aren't far behind. Albertsons ( ACI ) prices are much higher, and a merger would allow it to bring prices down thanks to Kroger's ( KR ) scale and ability to negotiate with suppliers, he said.

"It would definitely help them compete with Walmart ( WMT ), Target, Amazon and everybody else," Feldman said. "I do think the merger would help a lot."

Shares of Kroger ( KR ) rose 0.5% in recent trading Friday. Albertsons ( ACI ) gained 0.3%, and Walmart ( WMT ) climbed 0.6%.

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