Why, when the economy seems so strong, are we hearing rumblings that the foodservice segment is “soft”? Most specialists who monitor the industry will tell you, “Too many restaurants.” That probably accounts for most of it; however, other issues accumulatively are affecting consumers’ discretionary dollars that normally would find their way to a meal away from home. Some of those are as follows.
On many occasions, I have wondered why the government spends so much money on seeking and publishing information that at times seemed “so what” to me—until I looked for information on generational spending. That data is the source for most of the facts and figures in this article and its value and impact are enormous.
I started by trying to find out how much in total these various age groups spend eating out and at home. I also was interested in how much they spend consuming all types of venues including entertainment. I came close. What I learned was how much these groups spend as individual households, and that proved to be very interesting.
Much of the data used in this piece was developed by economists at the Bureau of Labor Statistics. Steve Henderson, for one, made the following observation that sets the tone for this message: “Move over, baby boomers: millennials are now America’s largest generation. Over the past few years, my colleagues and I at the Bureau of Labor Statistics have gotten a lot of questions about millennials’ spending habits. As more millennials enter the workforce, the purchasing power of this generation increases, and both marketers and researchers are interested in how millennials choose to spend their paychecks.”
I don’t know exactly when it became fashionable to label certain age groups here in the United States, but they stack up this way: 1928 or earlier for the Greatest Generation. It was followed by the Silent Generation (1929 to 1945) … baby boomers (1946 to 1964) … Generation X (1965 to 1980) … and millennials (1981–now). It seems to this writer that the millennials have received and continue to have more attention than most of the four generational age groups preceding them. But don’t sell the Generation X group (1965 to 1980) short; they represent the remainder of today’s senior population.
“Editor’s note: The Consumer Expenditure Survey is a household survey. While millennials outnumber other generations in number, they come in third behind Gen X and baby boomers with regards to independent households. Why’s that? Not all millennials are out living on their own just yet, so they’re not counted as separate households.”
For the record, some sources have a different description for the various age groups. As an example: first, there was the Lost Generation; next, the GI Generation; next, the Silent Generation; then came the baby boomers; the Greatest Generation; and Generation X. While they may have different titles, the time span for each is similar, except millennials who, some say, are 30 years plus, as opposed to all others with an age span of 20 to 25 years.
The following Generational Spending Habits Chart by Household from 1928 or earlier to the present was filed by Steve Henderson, an economist with the Bureau of Labor Statistics.
If you take a close look at the generational spending survey, you’ll notice it is in the millennials’ column that the gap between Food at Home and Eating Out differs by $373, and $1,018 for Generation X. It pretty much confirms that the competition between food at home and eating out continues to be close.
In a recent article in The Wall Street Journal, Spencer Jakab discusses how takeout is winning the food war. He points to the problem that is facing supermarket and packaged food companies, and that is: “People don’t want to cook anymore.” He goes on to point out: “Americans have always eaten out. What has changed is the growth of restaurant meals eaten at home, and most recently, prepared-meal kits.”
He reports: “According to the Bureau of Labor Statistics, food spending for meals prepared at home grew by less than 2% a year from 2013 to 2016 while spending on meals prepared elsewhere grew more than 20%.
“Americans have spent roughly 13% of their income on food for years. But for 2016, the latest year for which U.S. data are available, they spent nearly 44% of those food dollars on food prepared away from home—a share just shy of the peak seen during the housing boom over a decade ago. As recently as 2013, that share was below 40%. ……
“The Food Institute looked at expenditures in 2013 and found that millennial households spent 6.5% more a week than baby-boomer households on meals away from home despite having lower income overall. Baby boomers will spend less as they age if current demographic patterns hold.
“But today’s 35-year-olds, who haven’t cooked much for themselves so far, will likely keep ordering as family demands squeeze their time and increase overall dollars spent.”
Mr. Jakab concludes his observations as follows: “Supermarkets are fighting back by acting like restaurants with more prepared foods and in-store seating. Coupled with rising sales for fresh meat and vegetables, there is hope for some of them. For packaged-food brands, though, the challenge is deeper.”
The next time you visit a supermarket, if you have the time, take a look at the expanded choice of not only entrees and breakfast items, but the choices and variety of ethnic dishes, microwave ready. There is a reason they are no longer called TV dinners.