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.