The COVID-19 pandemic and its aftermath reshaped many aspects of life in the U.S., and how Americans eat and drink is no exception.
Disruptions in the initial months of COVID-19 forced food producers and distributors to adapt how food gets to consumers, and ongoing challenges with supply chains and the labor market have led to shortages at grocery stores. In the restaurant business, many restaurants have reoriented their businesses toward takeout and delivery, with the market for food delivery in the U.S. more than doubling during the pandemic.
The latter trend came in response to major disruption to the food service industry from lockdowns and public health measures early in the pandemic. Bars and restaurants were among the businesses hit hardest by these policies. Unable to host patrons at full capacity, establishments drastically reduced their staffing and turned to takeout and delivery to continue operating while keeping costs low. Employment in the sector fell by nearly half in just two months, from 12.4 million in February 2020 to 6.4 million in April 2020. Even after public health restrictions loosened later in 2020, employment in the sector has been slow to recover. Today, the food and drink services industry employs 11.6 million people, still short of its pre-pandemic peaks.
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While the COVID lockdowns of 2020 provided an initial shock to the industry, shifting consumer preferences have also been a challenge for food service professionals. Bars and restaurants reopened over the course of 2020, but not all consumers rushed back. As fears around COVID persisted, many consumers have opted to spend more of their food budget on groceries for meals at home. This reality quickly reversed trends in food spending over recent years. In 2020, spending on groceries as a share of total household spending reached its highest in two decades, while spending on purchased meals and beverages fell to their lowest levels since the Great Recession.
Time will tell how lasting changes in spending on food will be, especially in light of the high levels of inflation seen over the last year. While since the turn of the century, prices for food consumed at home grew more slowly than those for food consumed outside of the home, the opposite is true since the start of the pandemic. Since 2020, the Consumer Price Index (CPI) for food at home has risen by 18.2%, while the CPI for food away from home has grown by just 13.5% over the same span. The rate of price growth for food at home has been particularly stark after remaining roughly flat from 2014 to 2020. Though households in the pandemic have been more inclined to choose groceries over meals out, rapidly rising food prices have stretched household budgets as a result.
Inflation in the cost of food has been felt nationwide, but residents in some locations will feel the effects more than others. In states with lower incomes, especially in the South, residents spend a higher share of their overall household spend on food. Whether buying groceries or dining out, residents in these locations already struggle the most with food costs and will disproportionately feel the effects of inflation.
To determine the states where residents are spending the most on food, researchers on behalf of Self Financial used data from the U.S. Bureau of Economic Analysis to calculate all food and beverage spending as a share of total spending. In the event of a tie, the state with the greater grocery spending as a share of total spending was ranked higher.
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The data used in this analysis is from the U.S. Bureau of Economic Analysis’ Consumer Spending 2020 report. To determine the states where residents are spending the most on food, researchers on behalf of Self Financial calculated all food and beverage spending as a share of total spending. In the event of a tie, the state with the greater grocery spending as a share of total spending was ranked higher. For the purposes of this study, grocery spending is defined as “food and non-alcoholic beverages purchased for off-premises consumption” from the Bureau of Economic Analysis. Percentage calculations in this analysis may not add up due to rounding.