How changing your eating habits can save you money
TDLR: If you can limit your eating away from home, you will save money.
How much more do the rich spend?
Figure 1 — shows that people in the Highest income bracket spend approximately 3.4x more than the Lowest on food away from home.
What we derive from this is that as income levels increase you will see an increase in food at home spending. Food away from home spending increases much faster than food at home spending. In short, as your income level increases the frequency & dollars you spend on food away from home increases.
Monthly Spend
Another way to look at this information is by monthly spend.
Figure 2 shows that the highest income bracket spends over $1,000 per month on food. How can we use this information to make better decisions?
As you grow your income base, the trend shows that you’re more likely to increase your “eating out”. Eating away from home is nearly always discretionary expense that is controllable. For most families, reducing / eliminating that expense for a month would result in saving $150 to $500.
Why does eating out cost so much?
Five Guys founder, Jerry Murrell used to adjust prices to ensure that food remained approximately 30% of the total expense. For every $1 you spend in a typical fast casual restaurant, you are receiving $0.30 of food.
When you eat out, you are spending more money on the service + overhead. Restaurants are known for slim margins. Labor and rent are a restaurants biggest expenses after food. Equipment is a major capital expense for restaurants and can easily exceed $150k — paid over 2–5 years .
These factors contribute to why going to eat out a little bit more each month, can result in significant increases in monthly expenditures.
Data Source & Qualifying Information
The data was pulled from the 2014 US Bureau of Labor Statistics. I combined the lower and higher income brackets into one dataset. I classified anyone making less than $50k per year as “Lowest” income levels. Anyone making $50k to $120k as “Middle” income level. Anyone exceeding $120k as “Highest” income levels. The objective is to assess consumer spending across wealth brackets measured by annual income.
