On average, Americans spend more on food eaten outside their home than inside. If that describes you, then here’s a bit of good news. It’s an opportunity to save money.
Ever since March 2015, Americans have spent more money on food at restaurants or drinking establishments than they did on food they bought at the grocery store and prepared at home. In April 2016, Americans spent $3 billion more on food away from home including takeout.
While spending at restaurants has eclipsed spending on groceries, Americans eat only a third of their calories away from home. Since 1979, we eat at fast food restaurants four times as often and other restaurants twice as much.
What’s more is that 12 percent of our spending away from home doesn’t go directly to food. It also covers tips and taxes. Many states tax groceries at a much lower rate than they do prepared food at a restaurant, so everything about your meal out costs more.
Eating food away from home is more costly, less healthy and quickly becoming pricier. Restaurants sure are lucky they’re convenient.
How do you think you are doing compared to the national average? In thinking I was doing better than these statistics sound I checked on my food spending in my Eating Out and Groceries envelopes in the Envelope Spending and Funding report.
To my surprise, here’s what I found. Per capita, Americans spent $4,575 in food both at home and away from home and I was right on those numbers. That wasn’t too surprising, but over the past three months, I have spent around $1,700 on food away from home and just $1,100 on groceries.
So my total food expenditure was average, but my eating away from home spending was abnormally high. I knew before doing the math I could save money by cutting back on how much I eat out, but the numbers were even more demonstrative that I could save a lot of money by eating out less.
Here’s how I’m planning on fixing my food spending problem and how you too can save money by spending more on groceries.
Spend More on Groceries than Eating Out
It’s not too crazy to think the two expenditures are related. The more you eat food from a grocery store that you prepare, the less you will eat out. So set up your budget so the numbers are related.
I did the math for me and switching from spending $17 eating out for every $11 at the grocery store to $11 eating out for every $17 spent on food prepared at home would save $1,000 every three months. For me, I would be switching 1-2 meals eating out for 2-3 more meals at home.
Just keeping to that change would save $4,000 every year. Your numbers may vary, but find the balance that works for you between dining out and eating in.
One of the reasons the experts think eating away from home has finally passed at-home spending is because grocery stores have become locked in a low-price competition for shoppers that has reached its peak.
The good news for us is the low prices are ours for the taking, but just showing up to the store doesn’t mean you’ll automatically be saving money.
Before you go, prepare with a menu and a shopping list and stick to it when you’re going from aisle to aisle. Use coupons on what you would normally buy, but if it isn’t on the list you’ll still be spending more money even with a coupon.
Food is becoming a lower percentage of disposable spending
In 1950, food expenses were 20 percent of disposable income spending, today they hover around 10 percent. Food at home spending has also dropped from 17 percent to 5.5 percent, while food away from home has increased from 3.6 to 4.3.
Less of our budgets on average need to go to food spending and a little belt tightening can be effective in saving money when it comes to what you’re eating.
Grow your own food to save even more
In 1952, 10.3 percent of food spending came on food that was grown at home. By 1960, it had dropped to 6.2 percent and hasn’t been above 2 percent since 1992. If you have the space to plant and grow your own fruits or vegetables, you’ll not only have fresh food right outside, but it will cost you less.
If you would like even more tips on cutting spending and reducing debt, take advantage of a no-obligation 5-page debt analysis.