Articles for August 2013

Mobile apps Made in USA

Flurry Analytics recently shared some stats about mobile apps based on country of origin. Through June 2013 only 36% of apps were developed in USA. Of course apps in Flurry’s system were only considered for this analysis. That is 350 thousand apps out of 1700 thousand apps available in Google play and Apple store. So yes looking at only 20% of total apps available, one can conclude that more apps are developed outside USA.

In the same article though Flurry Analytics shows stats that if you take user engagement in to account (time spent with apps) then apps made in USA dominates the market. I think with abundance of apps available what is going to matter is getting discovered in the app store, quality of app, and ability to engage users. Not that’s a challenge and I hope developers in USA are ready for it.

At designX6 we are trying and hope to make a difference in the crowded marketplace.

Agricultural policies, food prices, and home cooking – Part 2

This post is second part of the three part series on agricultural policies, food prices, and cooking at home. Part one was about agricultural policies and its impact if any on food prices. In part two we will compare eating out and cooking at home. In part three I will share my personal experience about cooking at home.

First thing first, how much we are spending on food away from home? Data suggests that percentage of food expenditures away from home has steadily increased over the years. See below chart for total food expenditures as well share of food away from home in 1987 and 2011.

Food expenditure away from home

As you can see food away from home share has gone up from 41% to 47% of total food expenditures. Food away from home includes full service restaurants, limited service eating places (primarily fast food places, vending machines etc), hotel/motels, school/colleges, stores/bars and others. Interesting to note that as we eat out more, Limited Eating Places increased their share by 1%. If we exclude full service restaurants then most of the places which are defined as food away from home serves fast food. In that case fast food share is even higher 55% in 1987 and 64% in 2011. In summary it is very clear that not just food away from home expenditures has increased in last few years, fast food places has a significant dollar share in food away from home.

By and large success of fast food is attributed to three key factors; convenience, addictive taste of the food, and price. There is no doubt that eating at fast food place is convenient, available everywhere and service is quick. Let’s look at some numbers from two big brands McDonald’s and YUM (YUM owns KFC, Pizza Hut, and Taco Bells). Based on 2012 10-K filing there were 14,908 McDonald’s fast food locations (operated by franchise, and affiliates) while YUM was selling fast food in 16,006 locations across US. So just between these two big brands there are 30,914 locations across US for fast food compared to 37,053 super stores where you can buy grocery. If you trust Google has decent GPS data then just see below Google map filled with fast food places across US. Availability of fast food is certainly not an issue.

Fast food restaurants in US

As per as taste goes, well we all like deep fried food. Fast food places have done a great job at providing same taste and overall experience at every location. No wonder once you like the taste, consistency across locations ensures you choose fast food over any other food.

Cheap price for fast food though is a highly debatable topic. Low price of fast food is definitely a selling point for fast food operators. Of course marketing budget of thousands of dollar ensures low price point of view is communicated very well in the advertising. For one meal/snack for one person probably there is some truth in it however moment you talk about eating out at fast food place with your family daily, cheap price is highly questionable.

Consider Food for Thought article from Bureau of Labor Statistics. Chart on page 3 is very interesting. Using same data I created a chart to highlight percentage of food away from home as below.

Lowest income group spends less on food away from home

Data set is from 2009 and it is about average annual expenditures by income groups. Data suggests that lowest and second lowest income group spent the lowest proportional amount of annual food expenditures on food away from home (about 30%). If eating out was cheap we would have seen some different pattern.

Let’s also review Consumer Price Index percent change data to know how food prices changed over the years.

Consumer price index

It appears that food at home price change is more choppy than food away from home. Over the ten year period though percent change for food away from home is higher than food at home. Rate of change is close to inflation rate which is around 2.5% in last ten years. Restaurants and fast food places cannot defeat inflation specially if they want to stay in business. In summary if prices for food at grocery stores is going up, eating out will be even more expensive.

This data is great but can we refer day to day example? Numerous times comparison was made between cost of fast food and food at home. In 2011 Mark Bittman for The NewYork Times wrote an article, Is Junk Food Really Cheaper? In this article Mark made a case that eating out at McDonald’s for four people will cost around $28 while you can serve four people a roasted chicken with vegetables along with a simple salad and milk for about $14. Here is the link to infographics which accompanied Mark’s article. As always comments were interesting as the article itself. Other than yes comparison is correct and health benefits of cooking at home comments rest were challenging Mark’s point of view.

  • Infographic is wrong – You cannot actually buy only 4 slices of bread, half cup of olive oil etc
  • Comparison of home cook meal to eating out in fast food chain is not fair. Comparison should be between ingredients required to cook a meal and store bought processed ready to cook meal.
  • $28 sounds like top of the line order not $1 burger with side salad.
  • What about investment required in kitchen appliances?
  • What about time required for cooking and cleanup afterwards?
  • What about skills required for cooking?

All these comments have some merit. Certainly time and cooking skills seems bigger hurdle if you already have kitchen appliances or can afford buying kitchen appliances.

I will share my experiences with home cooking in third and last part of this series where I will refer some of the comments on Mark’s article.

Agricultural policies, food prices, and home cooking – Part 1

I mentioned agricultural policies in my last post about percentage of income spent on food. When I was collecting data for the post, I came across some interesting data sets on agricultural policies. This post is actually first part of three part series to share the data and my thoughts on the topic. Part one is about agricultural policies and its impact if any on food prices. In part two we will look at comparison between eating out fast food and cooking at home. In part three I will share my personal experience about cooking at home.

Discussions about US agricultural policies and its impact on increasing junk food consumption is not new. In August 2004 Peter Jennings wrote a story How to get fat without really trying?. In the story Peter described marketing junk food to kids as well impact of agricultural polices in increasing junk food consumption. Peter’s argument was based on distribution of subsidy, crop like corn to be precise feed corn getting major share of support. See below Peter Jenning’s findings on food industry in intriguing five part (~ 10 minutes each) video series available now on YouTube.

If you are in a hurry and would like to watch the video series later, refer below chart to know the percentage distribution of subsidy by crop type. Chart is based on data from EWG Farm Subsidies. Per EWG, from 1995 to 2012 ~ $292 billion were paid in subsidies out of which corn crop share was ~ $84 billion, almost 30%.

 

Food subsidy

Agricultural policies and its impact on food prices is a very complex topic researched by various organizations and individuals on ongoing basis. Consider a project like Effects of Agricultural Research and Farm Subsidy Policies on Human Nutrition and Obesity. This project has produced some thought provoking articles like Farm subsidies and obesity in the United States: National evidence and international comparisons  by Julian M. Alston, Daniel A. Sumner, and Stephen A. Vosti. In the article they provide very compelling argument that impact of US agricultural policy on food prices and increase in obesity is negligible if any. One of the measure referenced in the article is defined by Organization for Economic Co-Operation and Development (OECD). For all countries which participate in OECD, Producer Support Estimate (PSE) and Customer Support Estimate (CSE) data is available. PSE measure includes all transfers to producers by government or consumers while CSE is all about net effect of agricultural policies on consumers (either benefits or increase in food prices). I gathered some PSE and CSE data from OECD website and Body Mass Index (BMI) data from World  Health Organization Global Infobase. See below chart (click to see full size) for some interesting comparison between OECD countries.

2002 Obesity ranking

2010 Obesity ranking

What do we see here? Countries like Switzerland and Japan where producers received more support than say producers in US and Australia are actually ranked lower in Obesity list. CSE numbers though suggest some direct relationship with obesity. In Switzerland and Japan consumers paid for supporting producers (negative CSE) and may be that helped to keep obesity under control. This CSE theory does not work though for Mexico where majority of subsidy is paid by consumers and still they rank higher on obesity list.

In US average CSE from 1986 to 2011 was + 2.84% meaning consumers did receive some benefit from agricultural policy. The number 2.84% is so low though that its impact if any on food prices is probably negligible. FYI between 1986 and 2004 average CSE was negative (-0.03%) meaning consumers were supporting producers.

About recent increase in food prices, if you refer USDA site then outlook for 2014 suggests that Consumer Price Indexes (CPI) for food, food-at-home, and food-away-from-home are expected to increase 2.5 to 3.5 percent over 2013 levels. So the theory that agricultural policies helped reducing prices for crops and in turn junk food probably does not have much merit to it. May be its time to revisit cooking at home from health and finance perspective.

What percentage of your income do you spend on food?

Just the other day I was talking with a family friend when she mentioned about growing prices of food. To be fair even though food prices are going up, food expenditure as percentage share of disposable personal income is not. Consider below line graph based on data from USDA (table#7).

As you can see percentage share of our income spent on food has seen downward trend over the years. Spending on eating out has gone up little bit but still sum of food at home and food away from home is trending downwards. From 23.4% in 1929 to 9.8% in 2011.

To be clear, disposable personal income includes any government help (food stamps, medical care etc) so as supplements to wages and salaries. Supplement to wages and salaries includes employers share for medical care, social security etc. Will the graph look different if we exclude such income? See below the line graph with data again from USDA (table#8).

Very similar trend. It appears that food prices are contained over the years which explains why food expenditures as percentage share of income trending downwards. Reasons include industrialization of farming, technological advancement in agriculture, controversial agriculture subsidy and so on. Whatever may be the reason, one thing is sure that larger percentage of our paycheck now goes towards satisfying needs and wants beyond food.

Beyond bullet point thinking

If not immediately but over the years I have realized growing misuse of PowerPoint in the business world. Earlier on this blog I have shared my deliberate attempt to overcome PowerPoint driven bullet point thinking in the business world. Today I would like to share few things I tried and still trying outside business world.

E-mails: I know, I know but yes thinking about emails differently helped. Instead simple blurb, I started writing appropriate level of details. Proper sentences rather than bullet points. I even got good feedback sometimes which encouraged me to keep using new way of writing emails.

SlideShare: I posted few slideshows on SlideShare. I developed story first and then slides were created based on the story. As you guessed by now, stories were written in simple word document. I revised them several times before creating slides. Stories provided reason for me to write more than bullet points.

Blog: I started blogging back in 2009. It was important for me that I write often. As often as couple of posts each week. Some posts stayed as draft only while others were published. I was fully aware of my shortcomings with writing style and I still am. But my need to express thoughts in words is much higher than worrying about correct writing style.

Now designX6 work brings lot more challenges and many opportunities to go beyond bullet points. Within our small team we are fortunate to have some good writers. They can write good poems too, see below HallowsThieves game poem as an example. We are really enjoying what we are developing.

Happy writing.