Response about how Fast food really is cheaper.
On Sunday, September 25, 2011 the New York Times published an article by Mark Bittman titled “Is Junk Food Really Cheaper?” In the article, the author implies that the obesity issue in the United States is due primarily to fast food restaurants and the way they market food to consumers. In addition, he contends that “junk” food is actually an addictive product, in the same way that tobacco is. He recommends a slew of government regulations and price controls to correct this issue, modeled in part on the 1998 Tobacco Master Settlement Agreement. In Bittman’s ideal world, market forces would not apply to the pricing and availability of food. Instead, the government would use regulations, tariffs and price controls to manipulate the food choices you make, whether you cook for yourself or eat out, and how much it will cost. This is necessary, according to Bittman, because regular folks can’t be trusted with making these seemingly mundane decisions on their own.
To start, let me first reveal that I have a financial interest in fast food. My wife is associated with a national quick-serve restaurant chain. I’m a shareholder of McDonald’s and other fast-food companies. If you work in a job that has a pension (like a teacher, firefighter, or policeman), you are a shareholder of these businesses as well. Likewise, if you have any diversified stock market investments (a mutual fund held in an IRA or 401k, for example), you are also a shareholder. I mention this because it’s important to remember who the stakeholders actually are – not a faceless organization, but regular people who work regular jobs, pay their taxes, and are able to put a little away each year to help secure their future. It should be noted that Bittman himself has a financial interest in selling you on his books and website that describe healthful ways to cook at home. That sounds like an admirable business, but it did not go unnoticed that this conflict of interest for some reason went unmentioned in his article.
There’s another group of stakeholders as well. You may not be aware, but nearly all fast food chains are franchised. This means that the individual stores are not owned by a parent corporation or stockholders, but by individual small business owners. Examples of franchised restaurants include McDonald’s, Wendy’s, Burger King, Pizza Hut, Domino’s, and KFC. These restaurants are owned and managed by entrepreneurs who live and work in their communities, and give back to those communities in numerous ways that you won’t read about in the New York Times. They provide entry level, mid-level, and high level jobs to local employees that don’t require college degrees or advanced training to obtain. These are good jobs with real upside and growth potential, where store managers can make $70,000 a year or more including benefits. If one of your goals as a consumer is to support local business, your neighbors, and your community, one way you can do that is by patronizing your local fast food restaurant.
Bittman’s main argument is that food cooked at home is cheaper and healthier than fast food. He implies that bad food choices are made at fast food restaurants, whereas good food choices are made in the supermarket. Really? Isn’t it possible that bad food choices could be made at the supermarket, and good food choices could be made at a fast food restaurant? Well, there are both good and bad food options at the supermarket, everyone knows that. But guess what, in addition to indulgent food, there are plenty of healthy food choices available at fast food restaurants as well. For years, McDonald’s, the subject of Bittman’s offensive, has offered healthy options like salads, grilled chicken, calorie-free drinks, yogurt, milk, oatmeal, and fruit. Fast food restaurants need to compete for consumer’s dollars, and one way they do that is by offering customers a wide variety of choices at a value price.
The next argument presented is that fast food is significantly more expensive than food bought at the supermarket and cooked at home. Bittman tries to show this by comparing the price of a family meal at McDonald’s to the price of the raw ingredients of a meal made at home. In this analysis, he distorts both the cost of a fast food meal and the costs of a meal at home. You can probably guess which way. He claims the cost of a typical family meal at McDonalds is $28, whereas a healthy meal prepared at home costs only $14. The truth is that judicious ordering of value items at McDonalds will yield a smorgasbord of food for under $20. On this budget at a typical NJ location, you could purchase 4 McDouble cheeseburgers ($1 each), 4 small sodas ($1.19 each), 4 small fries ($1 each) and 20 chicken McNuggets ($4.99), a total of $18.99 including 7% sales tax. So his cost estimate is at least 40% higher than the true value that fast food can offer. But what about the meal at home for $14? Is that realistic? Let’s have a look.
Bittman’s meal at home for $14 includes milk ($1.49), salt and pepper (5 cents), olive oil (55 cents), bread (75 cents), potatoes ($2.98), lemon (50 cents), chicken ($5.96) and lettuce ($1.50). He calls the meal “chicken, potatoes and salad for four”. Really? His salad is chopped lettuce and olive oil. Have you ever eaten a salad like that? That certainly wouldn’t pass for a salad at a restaurant. Restaurant salads usually include croutons, onions, cheese, olives, and tomatoes. And a plain baked potato? He offers no condiments for that, either. The chicken includes no gravy or dressing. Does this sound like a realistic meal? Bittman also excludes the necessary costs of producing this meal, namely energy (gas and electricity), soap and cleaning products, cookware, and spoilage costs. And of course, he values your labor at $0. Here’s the truth: the real cost of this meal at home is $20, and that’s If you cook it yourself and clean up as well. Let’s also not forgot that a healthy meal including salad, a baked potato, and grilled chicken can easily be purchased at a fast-food restaurant (Wendy’s comes to mind). And they’ll even include some condiments to make it enjoyable.
Perhaps Bittman’s most audacious contention is that “junk” food is an addictive product, just like cigarettes. This “addictive substance” label is important for his cause, because it’s the justification for the solutions he proposes. But there’s a small problem standing in his way: There has never been an accepted academic study published that shows that fast-food is addictive. This is in contrast to tobacco, which has been shown time and again to be a highly addictive substance in numerous scientific studies. Is there even a worthwhile comparison here?
What is Bittman really after? Plenty, as it turns out. He has two main goals for the industry, as follows:
First, Bittman proposes that fast-food advertising become government regulated. He implies that fast-food companies, instead of advertising their product, should be required to provide disincentive advertising, just like tobacco companies in their campaigns against childhood smoking. He also demands that fast food advertising be exempt from freedom of speech laws. In his view, such speech shouldn’t be free because it is really “behavior manipulation of addictive substances.” Interestingly, he fails to provide any direct support for this claim. The best he can do is an oblique reference to a study that compares “junk” food to addictive substances. Importantly, this study does not conclude that “junk” food is addictive. Is that a surprise to anyone?
Second, Bittman wants “junk” food makers to be “forced to pay the true costs of production”. What this means is that in Bittman’s view, the retail price of “junk” food needs to skyrocket. This could be done with taxes, above market wages for food service personnel or a myriad of other market controls imposed by the government. This is an interesting view, given that Bittman’s initial proposition was that fast food was already significantly more expensive than cooking at home. Perhaps he’s acutely aware that it isn’t. The argument here is apparently that capitalism is working too well. The value that fast food provides is allowing even low-wage workers the freedom to enjoy some down time and a meal out with their families. His proposal would put a firm stop to that.
The author is silent on how this program would be imposed and regulated, but it would obviously have to be done by a government body. My suspicion is that the implementation would be so bloated and unpalatable sounding that he’s afraid to mention it until he gets more support for his cause. Can you imagine what such a government body would look like? How would they define “junk” food? Would politicians be able to secure carve-outs to protect manufacturers in their home districts? How would the costs (both direct and indirect) be accounted for? Who would be accountable? Would minors be prevented from purchasing “unhealthy” foods? And given the recession, could there possibly be a worse time to stymie business growth with unnecessary regulation and government interference in the free market?
Bittman obviously has an agenda. It’s that regular folks can’t make even simple choices about what to eat on their own. He feels the best answer is for government to force better choices on people through regulation and market interference. This time, he makes his case by going after McDonald’s and other fast food providers. But make no mistake, regulating fast food isn’t the end for Bittman, it’s merely the first step of an entire salvo of government food regulations. And wouldn’t you know, this plan would create a real boon for Bittman and his business interests. Just something to think about!