In 1869, when the U.S. Government first measured where Americans ate, nearly 95% of food was consumed at home, and only 5.3% away from home. Of that 95%, over a third was produced at home, on family farms or from backyard vegetable gardens, and two-thirds purchased from stores and other suppliers. From 1869 until the middle 1970s, food at home remained relatively stable at around 64% of America’s food dollars. During that time, however, food away from home grew from 5% to nearly 36%. It did this by slowing eroding away home production, which falls over the same period from 33% to barely over 3%.

After the middle 1970s, with home production basically gone from American life, food away from home began to eat into the dollars that had gone to food consumed at home for over 100 years – the dollars that food company revenues depend on. Since 1970, dollars spent on food for away from home consumption have grown by 1,237%. Today, unlike the situation even 40 years ago, every dollar that flows to food away from home comes out of the pockets of the companies who make food products for consumption at home.

Half of all food dollars goes out
By 2006, the most recent year for which data are available, barely more than half of the food eaten by Americans was consumed at home, and much less than 1% of the total was actually produced at home. Food away from home now accounts for nearly 49% of the average American food dollar. The chart below shows the allocation of food spending for the average American household across food purchased for consumption at home, food produced by the family for home consumption, and food consumed outside the home.

Eating at home
The kinds of stores shopped for at-home food have changed substantially over the course of the 20 th century. The dominance of small Mom & Pop neighborhood stores (labeled Other Grocery Stores in the table below) finished with the end of World War II, falling victim to the suburbanization of America and the rise of the modern supermarket. Modern supermarkets also forced specialty stores such as butchers, bakers, and green grocers from the marketplace. Well over half of current-day shoppers have never shopped for food in a marketplace not dominated by the modern supermarket or its predecessors. Only people in their 50s can even remember a world in which modern supermarkets didn’t dominate the market.

Home deliveries have made a bit of a comeback with services like Peapod and others over the past decade or so. In the late 1950s, home delivery accounted for between 6-8% of expenditures for food at home. But the days of the milkman, the eggman, and the breadman were numbered. By the late 1970s, home delivery accounted for only between 1-2% of expenditures. Over the past ten years, however, the share for home delivery has averaged around 4% of expenditures for food at home, including both delivered prepared foods and groceries.

Eating out — fast food fuels growth
The sources for food away from home have also shifted over the years. Full-service restaurants have dropped from the majority of food away from home sales in 1929, but have maintained a 40% share for the past 30 years. Growth in the industry, however, has been in limited service outlets, better known as “fast food”, which in 2006 were only a couple of percentage points lower in share than full service restaurants. The surge in meals at school in the 1950s–1970s as shown in the chart below comes from the Baby Boomers.

The restaurant industry in the U.S. is projected to top $558 billion dollars in food and drink sales in 2008, an average of over $1.5 billion a day. Approximately 133 million Americans are food-service patrons on any given day, making the average check size nearly $12 per person. This level of spending is a 13-fold increase in sales since 1970 and today accounts for about 4% of total U.S. GDP. There are nearly 950 thousand places to eat in the U.S., employing over 13 million people. Nearly one in five persons (18%) visit quick-serve restaurants ten or more times per month, and 19% visit sit-down restaurants six or more times per month.

Quick Service Restaurants — Fast Facts:

• Persons under 35 years of age are 34% more likely than average to be heavy users of QSRs, while those over 55 are 45% less likely to be heavy users.
• Children in the household, especially teens, drive higher than average usage of QSRs.
• African Americans are above average QSR heavy users (19% more likely than the national average).

Sit-Down Restaurants — Fast Facts:

• Heavy users of sit-down restaurants tend to mirror the population in terms of age, slightly above average for 45–64 year olds.
• Heavy users are much more likely to have higher incomes than average, 45% more likely than the national average for incomes greater than $100k.
• Larger families are less likely than average to be heavy users.

Source: Scarborough Research, Scarborough USA+, Release 2, 2007

Rising obesity rates
The fact is, the foods many people eat when dining out are much higher in calories than foods prepared at home. And children in particular consume substantially more calories when eating a restaurant meal than a meal at home.

On average, a child consumes 770 calories per meal when dining out versus 420 when eating at home. A University of Minnesota study found that children who never eat at quick-serve restaurants during the week average 1,952 calories per day, while those who average one or two visits per week average 2,192. Children who frequent quick-serve restaurants (three or more times per week) average 2,752 calories per day, over 40% more than those who never eat there. This level of consumption, combined with falling levels of physical activity among children, help to drive the doubling obesity rate seen for children in the past 20 years. And teens have seen a tripling of the rate over the same period.

The higher caloric density of restaurant food was much less of a factor for obesity when Americans ate out less. Today though, with nearly half of all persons eating out each day, high-calorie restaurant meals are making much more of an impact. It is not unusual for a single restaurant meal, or in extreme cases single dishes, to contain more than an entire day’s recommended consumption of calories. In fact, it can be quite difficult to estimate how many calories are eaten when dining out at a favorite restaurant. A study of registered dieticians conducted by the Center for Science in the Public Interest found that even these trained professionals often substantially underestimated the caloric density of restaurant dishes:

• Lasagna—underestimated caloric content by 28%
• Grilled chicken caesar salad—underestimated by 33%
• Porterhouse steak dinner—underestimated by 44%
• Hamburger and onion rings—underestimated by 44%
• Tuna salad sandwich—underestimated by 48%

Dining out in the future
The trend for an increasing share of food dollars (and caloric intake) to be spent on food consumed outside the home seems likely to continue, especially when seen in a global context. American-style quick-service restaurants are spreading rapidly in both the developed and the less-developed world and will help to drive a global trend. The wholesale entry of women into the labor force in the U.S., which in no small way has helped to drive the trend toward eating out more, will also drive increases across countries as more women enter the labor force globally.

By and large, it is the pre-Baby Boom generation, those aged 63 and over today, who have the lowest usage of all kinds of food service options. The groups that follow, from the Baby Boom to Gen X, Y, and Z, are each more likely to eat out than the group who came before. As these consumers age, they will take their dining habits with them, gradually replacing the pre-Boomers and eventually the Baby Boom itself with new consumers who are even more likely to want to dine out.

A broad and long-lasting recession could slow down growth in food away from home. Incomes in the U.S. in real dollars have been stagnant for nearly ten years, and the economic costs of paying for the soon-to-retire Baby Boom generation could keep them stagnant—or even lower them—for the next several decades. Even so, while this situation might put pressure on the growth trends seen in food away from home, it seems unlikely to reverse the trend.

Manufacturers and retailers of food for home consumption will need to redefine their marketplace from food prepared/consumed at home to the broader marketplace for nutrition, regardless of where it is purchased or consumed, or may well be at risk for becoming niche players. In addition, increasing levels of competition from food service companies looking to move into the home market will keep manufacturers and retailers on their toes.