Coles boss says rising rates are turning restaurant diners into home cooks

As interest rates continue to rise, coffee lovers are buying capsules rather than visiting cafes as people also look to replicate fine dining meals at home.

Coles chief executive Leah Weckert believes the rising tide of higher interest rates, which could include another rise by the RBA on Melbourne Cup day, is encouraging people to pull back from spending at restaurants and cafes to drive home cooking and sales at her stores.

It comes as the retail giant starts to turn its attention to the crucial Christmas shopping period where it is promising to have a wider range of food and groceries at multiple price points, as households cook and entertain more at home.

Speaking to The Australian after the Coles annual general meeting in Melbourne on Friday Ms Weckert said the supermarket sector should benefit from rising interest rates as consumers opt to cook more at home rather than dining out to help stretch their household budgets further as cost of living increases pinch.

Coles CEO Leah Weckert. Picture: Nicki Connolly

“The good thing for the supermarket sector is that customers are telling us at the moment that they are reducing the amount of spend in restaurants and takeaway, so outside of home, and now they are looking to cook more at home to manage their budget.

“And we are a great place to come to find great options to be able to do that, whether that‘s using coffee capsules to replace the takeaway coffee that you get at the local cafe … or whether it’s something to look to replicate a really great meal at home, we have got great options in that.”

The Reserve Bank is tipped to hike rates on Tuesday, Melbourne Cup day, following a recent spike in inflation and strong retail sales figures which is likely to put even more pressure on homeowners as well as people who rent and the economy in general as higher interest rates impact all aspects of the national economy.

Ms Weckert said she believed Coles was “well placed” to benefit as “out of home consumption turned into in-home consumption”.

“We are already seeing a lot of customers as we have moved through a lot of the cost of living challenges and a number of rate rises now, we have seen more and more customers tell us that one of the reasons they are cutting back is eating out and we are optimistic that means that customers will come to us to replicate those (restaurant) experiences by cooking at home.”

She said recent deflation in fruit, vegetables and meat also meant it was becoming cheaper for shoppers to cook at home.

Earlier at the AGM Ms Weckert told shareholders first quarter sales in supermarkets and liquor were up 4.7 per cent and 1.8 per cent respectively. Supermarkets e-commerce revenue growth was 24.6 per cent, and liquor e-commerce revenue growth was 32.2 per cent for the quarter.

She said while the Redbank automated distribution centre (ADC) in Queensland was already servicing 219 stores, Coles was working toward the Kemps Creek ADC in New South Wales receiving its first inbound deliveries in the third quarter.

A shareholder asked Coles chairman James Graham about the rise in theft at Coles supermarkets, which Ms Weckert called out as being a growing problem recently, and the chair said the supermarket was investing in more technology and security measures to combat shoplifting and theft.

“There are some challenges but we feel we are making pretty good progress,” the chair said.

He said he hoped by the end of the calendar year more than 250 of its stores would have advanced technology solutions to help with this issue.

At the AGM there was a strong vote against the adoption of the remuneration report with 14.76 of votes lodged against the resolution. There was also a 10.95 per cent vote against a short-term incentive plan for the CEO and 13.72 per cent vote against a long-term incentive grant to the CEO.

Originally published as Coles boss says rising rates are turning restaurant diners into home cooks