For struggling families, cereal is choice for dinner

MILWAUKEE — Cereal for dinner? It's a tough reality for some cash-strapped people.

Rising popularity of cereal among those looking for a cheap meal combined with plunging ingredient costs to boost the second-quarter profit of Cheerios maker General Mills Inc. 50 percent.

The maker of Green Giant, Hamburger Helper and Yoplait yogurt also boosted its full-year earnings guidance for the second time in three months following the strong quarter.

The increase is a sign of the economic stress still facing families amid high unemployment who want to cut spending and save time, but don't want to rely on fast food. Food banks are seeing rising demand for cereal as people try to find a nutritious meal that costs as little as possible. That's blurring lines between traditional meals.

General Mills, based in Minneapolis, said it saw better sales of Chex, Cheerios and Fiber One.

More people are eating at home in the recession to save money, and meals outside of breakfast more often include cereal, said Jack Russo, an analyst for Edward Jones.

Kellie Hotz and her husband, Jeff, eat cereal for dinner three times a week as they struggle to stretch their budgets and care for a toddler. Hotz said cereal is less expensive than fast food, so she keeps a dozen boxes on hand.

"It's the fastest, easiest and at least somewhat half-nutritious thing to do during the weekdays," said Hotz, 29, of Arlington Heights, Ill.

Breakfast foods such as eggs are popular now all times of the day because they're quick, nutritious and inexpensive, said Christopher Shanahan, a research analyst with Frost & Sullivan.

"The lines of when to eat breakfast, when to eat dinner, when to eat lunch have been slightly blurring," he said.

Food banks across the country are clamoring for cereal to hand out to families, who are increasingly seeking out food assistance.

General Mills and Kellogg Co. have been donating cereal to Feeding America, the country's largest hunger-relief charity.

The recession has benefited food makers of all types, but analysts say General Mills is among the best-performing because it has cut costs and is focused on health and wellness products, which resonate with consumers right now.