Feast During Famine
Strapped consumers cope with rising food prices.
Economic downturns generate at least one kind of plenty: A bountiful supply of news stories about consumers cutting back. Whether it's carpooling, staying in on Saturday nights or visiting Mount Rushmore instead of the Eiffel Tower, there are plenty of ways to stretch that discretionary dollar during hard times.
USA Today reports that Americans are even paring down the grocery bill by sacrificing their arterial integrity: Adam Drewnowski, director of the Center for Public Health Nutrition at the University of Washington, says that strapped shoppers often ditch fruits and vegetables in favor of calorie-packed junk.
By junk, I mean glorious Kraft (KFT) macaroni and cheese and uber-sweet Cap'n Crunch (PEP). It isn't clear if this is because healthier fare is more expensive, or because comfort foods like Twinkies (IBCIQ) become more appealing when your dreams of early retirement are rapidly fading away.
With food costs rising 4% in 2007 -- the highest annual rate since 1990 -- and expected to rise 4.5% to 5.5% more in 2008, some shoppers are making like their 18th-century forebears and opting to grow food themselves. Vegetable gardens are back in vogue, and even chicken coops have suddenly reentered the mainstream lexicon.
During good times, few people even bother to make a grocery budget: Food seems so unquestionably essential. Now, all those buy-one-get-one-free specials are starting to seem like a good idea.
According to USA Today's poll, most consumers are thinning out their monthly food bills by opting for smaller portions, using leftovers and cooking at home; restaurants are definitely feeling the pinch as diners opt for homemade meals rather than greasy fast food. This doesn't bode well for gimmicky chains like Buffalo Wild Wings (BWLD), Sonic (SONC) and Steak 'n Shake (SNS), which serve up deep-fried cholesterol with a side of mayonnaise. And smaller portions can't bode well for Burger King (BKC): They're still hawking the Triple Whopper, which comes in at a mere 1100 calories.
The pressing question for the country's economy is whether these trends will last. Consumers cut back during recessions; it's just what they do. When the economy picks up again, however, the lean times are quickly forgotten, those backyard gardens go fallow and shoppers return to their gluttonous, free-spending ways.
Many argue that this time is different - always a dangerous proposition, to be sure. But with the bursting of the credit bubble, the American public may be turning on consumerism with the same ferocity with which it adopted strip-mall extravagance in the first place.
Without home equity to tap into and credit cards becoming increasingly tough to secure, we may have little choice but to revert back to simpler times - and live within our dwindling means.
The information on this website solely reflects the analysis of or opin=
=3D =3D3D ion about the performance of securities and financial markets by =
the wr=3D iter=3D3D s whose articles appear on the site. The views expresse=
d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi=
a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web=
site is intended to con=3D stitute a recom=3D3D mendation or advice address=
ed to an individual investor =3D or category of inve=3D3D stors to purchase=
, sell or hold any security, or to =3D take any action with re=3D3D spect t=
o the prospective movement of the securit=3D ies markets or to solicit t=3D=
3D he purchase or sale of any security. Any inv=3D estment decisions must b=
e made =3D3D by the reader either individually or in =3D consultation with =
his or her invest=3D3D ment professional. Minyanville write=3D rs and staff=
may trade or hold position=3D3D s in securities that are discuss=3D ed in =
articles appearing on the website. Wr=3D3D iters of articles are requir=3D =
ed to disclose whether they have a position in =3D3D any stock or fund disc=
us=3D sed in an article, but are not permitted to disclos=3D3D e the size o=
r direct=3D ion of the position. Nothing on this website is intende=3D3D d =
to solicit bus=3D iness of any kind for a writer's business or fund. Mi=
ny=3D3D anville mana=3D gement and staff as well as contributing writers wi=
ll not respo=3D3D nd to em=3D ails or other communications requesting inves=
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter