I got married well.
After seeing a recent statistic that 41% of first marriages end in divorce, I consider myself lucky. I managed to find a smart, funny, responsible and compassionate companion.
And he loves to cook!
I learned basic cooking skills in high school and college. I can make grilled cheese, boil an egg, and bake a nasty chocolate cake for someone’s birthday. But I don’t stray too far from these easy recipes and skills.
On the other hand, my husband is the one of our family who does most of our meals. He’s the one who can explain the different cuts of beef at the grocery store, and he’s the one who knows when to use dill and when to use rosemary. (I try to stay completely away from the spice rack.)
If food prices continue to move as they have over the past year, I think we’ll see more people like my husband cooking amazing meals at home rather than going out to eat. outdoors … and that will create some fantastic investment opportunities if you know where to look.
Back in the kitchen
The government recently announced that the consumer price index (CPI) was unchanged for June, as economists expected inflation to rise 0.1%. The 12-month CPI fell from 1.9% to 1.6% and is well below its five-year high of 2.7% reached in February.
There is a lot of noise right now about whether the Federal Reserve is going to hike rates again this year and whether the slowdown in inflation is far more than temporary, as the Fed claims.
But I don’t care about the Fed right now. If the Fed is going to act, it’s unlikely to be before December, and there’s a lot of data coming out by December that could sway the Fed.
If you dig a little deeper into the CPI report, there was a great nugget of data that no one is really talking about … and it creates a great opportunity for astute investors.
The government reported that prices for groceries (home food) fell in June. The price of food purchased from a grocery store and prepared at home has been steadily declining since its peak in September 2015. We saw a slight increase at the start of the year, but it appears that prices are resetting to zero. and drop.
In contrast, the price of food purchased from restaurants has steadily increased over the same period and shows little sign of falling.
The technology has made it possible to reduce the costs of food production by increasing agricultural production. Low gas prices have also reduced transportation costs. The bottom line: It’s now cheaper to buy food at the grocery store than in 2015.
Meanwhile, rising labor costs and skyrocketing rents have forced many restaurants to raise prices just to make a profit, making dining out much more expensive.
The US Department of Agriculture reports that home food prices fell 1.3% in 2016 from 2015 levels and are expected to increase between 0% and 1% in 2017. Restaurant food prices have jumped by 2.6% in 2016 and are not slowing down in 2017.
The market has changed
The race is on to monetize what arrives on your table for dinner. In recent years, we have seen an increase in meal delivery services such as Blue Apron, HelloFresh, Plated, and Home Chef. These companies cater to families (especially millennials) who want the convenience of cooking at home while enjoying a unique variety of meals – much more than my terrific grilled cheese sandwiches.
Earlier this summer, Amazon announced plans to acquire Whole Foods. Imagine if Amazon could streamline Whole Foods like it has done for its other businesses, cutting costs and attracting customers.
And of course, we have Wal-Mart head-to-head with Amazon, which could create a price war that works in favor of consumers.
The market has shifted in favor of the grocer over the restaurant. Food prices are falling in grocery stores while restaurants are raising their prices just to exceed operating costs. Meanwhile, most Americans’ wages are stagnant, making the choice obvious.
Investors should be wary of restaurants and take a fresh look at grocery stores like Kroger or even look for new opportunities generated by millennials.
Preheat oven. Sharpen the knives. Take out the cookbook. It’s time to cook dinner at home.