As I sit here, listening to NPR this morning, I realize that any attempts to discuss food will be tempered today by the news of <echo effect> IMPENDING FINANCIAL DOOM </echo effect>.
As my bank account clearly indicates, I am not a financial genius. Aside from the two lessons learned in my adult life (1. Avoid credit cards. 2. Cable television is not an investment), my relationship with money can be best described as equal that of my relationship with Kraft Cheese – It’s out there, I know it’s out there, but I don’t invite it into my home.
How I believe food fits into this world of <echo effect> IMPENDING FINANCIAL DOOM </echo effect> boils down to two basic thoughts.
Stuff becomes more expensive – On Sunday, the Guardian out of the UK posed the question “Is this the end of cheap food?“. This is the same question that The Economist had asked the month before. From the Guardian:
It’s going to be interesting,’ says James Walton, chief economist with the food retail industry’s education body, IDG. ‘UK shoppers aged under 50 have so far never experienced food-price inflation.’ Essentially, throughout most Britons’ lifetimes, food has become cheaper. But, in December, the inflation rate (by the government’s preferred consumer price index, the CPI) was 2.1 per cent, while for all foods it was 5.9 per cent. ‘Habits will change, although it’s unlikely we’re going to see Soviet-style queues at empty shelves.’
The basic thought here is that with the increased cost of short term energy (oil and gas), the more farmland being devoted to fuel (think ethanol) instead of food, and the loss of farmland due to climate change, means less food supply and more costs to bring that supply to market.
Less discretionary income to spend on nights on the town – This brings about what some call The Steakhouse index:
…the rising cost of beef appears to be accompanied by slowing demand. At Morton’s steakhouses, same-restaurant sales rose by a meager 0.5 percent in the first quarter of 2007. For the year, Morton’s expects same-restaurant revenue growth of between 1.5 percent and 3 percent. When Ruth’s Chris reported first-quarter sales in April, it reduced expectations of same-store sales growth substantially. At Rare Hospitality, same-store sales actually fell 1 percent in the most recent quarter. For the remaining three quarters of fiscal 2007, the company sees same-store revenue growth of between 0 percent and 2 percent for its Longhorn Steakhouse outlets. In each instance, same-store growth is rising at a rate slower than inflation.
All indications show that Steak Restaurant’s are not doing well. Here’s Ruth Chris over the past year…and Morton’s…and Darden’s Restaurants (owners of Longhorn Steakhouse).
None of them have had a good year.
What’s this all mean? Well, if the experts are to be believe, for an undetermined period of time, food will cost more money and people will have less discretionary income. If I were to make an uneducated and ill-informed guess, I suspect people will stop eating out at higher end places as much as they had in the past (noting that “higher end restaurants” mean different things to different people). This means that people will either eat at home more often, or (if they don’t change their eating out habits) eating more often at cheaper restaurants.
Now whether this will be reflected in the various food mediums remains to be seen.