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Fast food's big problem just keeps getting worse

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In the battle of fast food vs. the grocery store, the drive-thru is losing out on a key measure.

New data out Tuesday showed an index for "food at home" that measures the prices of major grocery store food groups decreased 0.2 percent. Meanwhile, food "away from home," which measures food sold at places such as full-service and fast-food restaurants, ticked up 0.2 percent in July, according to the Bureau of Labor Statistics.

Over the past year, the contrast is even starker. Food at home declined 1.6 percent during this period with some proteins seeing sharp decreases: to the tune of a 10.2 percent drop for ground beef and 3.4 percent for chicken. During the same period, food away from home has risen 2.8 percent.

This is good news for grocery shoppers and bad news for fast food giants, who eye the metric closely.

"The food deflation weighs on the traffic and pricing power and check of restaurants of restaurants," said David Palmer, RBC restaurant and food analyst, in an interview. "That is happening now because effectively the perimeter of the grocery store is the competitor to restaurants."

Recent industry results reflect a softening in both sales at established restaurants and visits to restaurants. Last month, comp sales dropped 1.4 percent while comp traffic declined 3.9 percent, according to TDn2K's Black Box Intelligence.

Some publicly traded restaurant companies have warned Wall Street they are getting pinched by cheaper supermarket food.

Wendy's CEO Todd Penegor blamed the gap in part for the slowdown in fast food.

"We believe there are multiple drivers behind the recent slowdown, but the most notable reason appears to be the continued gap between the cost of eating at home and the cost of dining out, which is now at its widest point since the recession," Penegor said on the company's latest earnings call.

Meanwhile at Qdoba owner Jack in the Box, CEO Leonard A. Comma said the unusually large gap "begs a little caution here going forward" as the industry sees the number of transactions drop as a result.

"In a deflationary commodities market, the supermarkets will reflect the down pricing very quickly and we think that that's paying off for them. What we believe will happen is that as the market gets back to a normalized level, essentially those transactions will come back," Comma said in a call with analysts earlier this month.

The bigger-than-usual difference between grocery and restaurant prices is part of a double whammy the industry is seeing right now as uncertainty weighs on some pockets, McDonald's explained to analysts during its earnings call late last month.

"I think generally, there's just a broader level of uncertainty in consumers' minds at the moment, both trying to gauge their financial security going forward, you know, whether through elections or through global events, people are slightly mindful of an unsettled world. And when people are uncertain, when families are uncertain, caution starts to prevail and they start to hold back on spend," said Stephen J. Easterbrook, McDonald's CEO.