Wednesday, August 24, 2011

Middle Income Households Cut Restaurant Spending

During the Great Recession, the average household cut its spending on food, especially eating out. A USDA analysis of who cut their spending the most reveals that middle-income households (in the middle 20 percent of the income distribution, with an average income of $46,012) cut their spending more than lower- or higher-income households.

Between 2006 and 2009, middle-income households cut their spending on groceries by 6 percent, after adjusting for inflation. They cut their spending on restaurant meals by a much larger 21 percent. No wonder restaurants were feeling the pain.

How did they manage to reduce their spending on both eating out and groceries? By buying lower-cost foods and shopping at lower-cost stores. A record 810 new private-label brands appeared on grocery store shelves in 2009, reports the USDA's Economic Research Service. Sales of packaged leafy greens fell relative to sales of less-expensive unpackaged greens. The market share captured by nontraditional food outlets (such as warehouse clubs and supercenters) also climbed, reaching 30 percent in 2009.

Source: USDA Economic Research Service, Food Spending Adjustments During Recessionary Times, Amber Waves, September 2011

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