people eating outside

Around 50 percent of the average American's food budget is committed to the most convenient food we can get our hands on, namely fast-food and sit-down restaurants. From 1999 to 2010, USDA found that the percentage of food budgets spent at fast-food restaurants moved up from 24 to 27 percent.

Meanwhile, another 26 percent of the food budget belongs to ready-to-eat and ready- to-cook food options. The remaining sliver of food consumed by Americans is purchased as basic or complex ingredients.

Dairy must tap into the more convenient markets in order to reach consumers. That's why it is important that companies like McDonald's feature dairy in 80 percent of their menu items and that 25 to 28 percent of all cheese sold winds up on pizza.

The recent Economic Research Service report also dove into the whys of convenience food purchases by Americans. It has been long held that convenience food purchases have been more and more affected by Americans who commit to long work days, but the report showed that the average hours worked by households had minimal effect on which category consumers purchase in.

Instead, it reported that the price of convenience foods in relation to less convenient counterparts and the degree of convenience demanded by households based on income fluctuations played the biggest roles in determining the amount of the food budget that was committed to purchasing convenient items.

Upon further inspection, fast-food spending was less responsive to itemized price changes than food purchased at retail stores. At the same time, however, it, along with sit-down restaurant food options, were five to six times more responsive to changes in household incomes.

On the flip side, dollars spent on basic and complex ingredients versus ready-to-eat or cook options were highly affected by changes in product prices.

Advertising also can take credit for a bit of the decision making process of Americans in relation to convenience purchases specifically in the fast-food category. A 1 percent boost in advertising for such foods improved demand 0.25 percent.

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(c) Hoard's Dairyman Intel 2016
August 15, 2016
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