The annual Wells Fargo Fourth of July Food Report revealed for this year’s holiday home-cooked burgers would be three times cheaper than dining out.
The Agri-Food Institute team at Wells Fargo collected data showing the current cost of ingredients to prepare a quarter pound hamburger at home is $2.16 per burger (which includes cheese, tomato, and lettuce) whereas, the average of five popular quick service restaurants has a price of $6.95 for the same quarter-pound hamburger.
The team at Wells Fargo highlights the mid-June 2024 Consumer Price Index (CPI) for Food at Home rose by 1% compared to mid-June 2023 when this same index was rising at 5.9%.
Courtney Schmidt, Wells Fargo Agri-Food Institute Sector Manager says food inflation has mostly moderated, but the increased labor, transportation and capital costs are weighing on the dining out industry.
“When you go to dine out, of the total cost that you’re paying, only 30% of that is food,” she says.
For food away from home, the mid-June 2024 CPI rose by 4%
The analysts at Wells Fargo say that the longer the mismatch in inflation for food at home vs. dining out continues, the more consumers will be economically incentivized to eat at home.
“You’re still paying more for your food when you go into the grocery store than a few years ago, but you’re seeing a slow down in that food inflation. This time last year, we were at nearly 6%. Food inflation is not going negative, and we’re still paying more, but you’re seeing a slowdown considerably in that food inflation,” Schmidt says.
The Wells Fargo Fourth of July Food Report highlights two categories that did see declines in prices at the grocery store compared to last year: potatoes (for potato salad) and avocadoes (for guacamole).
“Both of those markets have just seen more production out there. So you’ve seen more potato production; you’ve seen better avocado production. That’s just been helping those wholesale prices that have just transferred into the retail side,” Schmidt says.
Regarding elevated beef prices through the summer grilling season, Schmidt says we could see many months to a few years of elevated prices for beef.
“You’re seeing those elevated beef prices because we had that drought back in 2022 where we saw the cattle herd dropped to very low numbers. We really need to start seeing that herd rebuilding before we’re going to start seeing improvement in those prices,” Schmidt says.
She does offer that with lower corn prices leading to lower feed prices, for the animals processed beef production is up because producers are putting more weight on cattle.
“That’s added to the beef production, and we’ve also seen more imports of beef. So while we are seeing lower supplies of beef compared to where we were at last year, it’s not as bad as it could have been based on the size of the cattle herd,” Schmidt says.
She adds, “I think we’re still a couple years out before we’re going to start seeing some of that significant herd rebuilding.”
