Homemade meals are a great investment
I married well.
After seeing a recent statistic that 41% of first marriages end in divorce, I consider myself lucky. I managed to find a partner who is smart, funny, responsible and compassionate.
And he loves to cook!
I picked up some basic cooking skills during high school and college. I can grill cheese, boil an egg, and bake a chocolate cake for someone’s birthday. But I don’t stray too far from those easy recipes and skills.
On the other hand, my husband is the one in our family who makes most of our meals. He’s the one who can explain the different cuts of meat at the grocery store, and he’s the one who knows when to use dill and when to use rosemary. (I try to stay away from the spice rack altogether.)
If food prices continue to change the way they have over the past year, I think we’ll see more people like my husband cooking amazing meals at home instead of eating out…and that will create some opportunities for fantastic investment if you know where to look.
back in the kitchen
The government recently announced that the consumer price index (CPI) was unchanged in June, while economists expected inflation to rise 0.1%. The 12-month CPI has fallen to 1.6% from 1.9% and is well below its five-year high of 2.7% hit in February.
There is a lot of buzz right now about whether the Fed will raise rates again this year and whether the slowdown in inflation is much more than temporary, as the Fed has been claiming.
But I don’t care about the Federal Reserve right now. If the Fed is going to act, it’s unlikely to be until December, and there’s a lot of data coming out between now and December that could sway the Fed.
If you dig a little deeper into the CPI report, there’s a lot of data that no one is really talking about…and that creates a huge opportunity for astute investors.
The government reported that grocery prices (food delivery) fell in June. The price of food purchased at a grocery store and prepared at home has dropped steadily since it peaked in September 2015. We experienced a small uptick earlier this year, but it seems prices are rolling once again and going down.
By contrast, the price of food purchased at restaurants has risen steadily over the same period and shows little sign of letting up.
Technology has worked to reduce costs in food production by increasing crop production. Low gasoline prices have also reduced transportation costs. The bottom line: It’s now cheaper to buy food at the supermarket than it was in 2015.
Meanwhile, rising labor costs and skyrocketing rents have forced many restaurants to raise their prices just to make a profit, making it much more expensive to eat out.
The United States Department of Agriculture reports that home meal prices fell 1.3% in 2016 from 2015 levels and are expected to rise 0% to 1% in 2017. restaurant food increased 2.6% in 2016 and did not slow down in 2017.
The market has changed
The race is on to profit from what’s coming to your dinner table. We’ve seen a rise in meal delivery services like Blue Apron, HelloFresh, Plated, and Home Chef in recent years. These companies cater to families (particularly millennials) who are looking for the convenience of cooking at home while also getting a unique variety of meals, much more than my amazing grilled cheese sandwiches.
Earlier this summer, Amazon announced plans to acquire Whole Foods. Imagine if Amazon could streamline Whole Foods the same way it has its other businesses, cutting costs and attracting customers.
And, of course, we have Wal-Mart going head-to-head with Amazon, which could create a price war for consumers.
The market has changed in favor of the grocer over the restaurant. Food prices in grocery stores are going down, while restaurants are raising their prices just to beat the cost of operating. Meanwhile, wages for most Americans are stagnating, making the choice an obvious one.
Investors should watch out for restaurants and take a fresh look at grocery stores like Kroger or even keep an eye out for new millennial-driven opportunities.
Preheat the oven. Sharpens knives. Get out the cookbook. It’s time to make dinner at home.
