Place matters: Out-of-home demand for food and beverages in Great Britain

Abstract

Fiscal policies to influence consumption of food and beverages are increasing globally. Most food demand studies focus on understanding consumer response in the context of food and beverages consumed at home. Yet food and beverages consumed outside of the home play an increasing part in our diets, and demand elasticities for these settings are crucial for assessing the potential impact of such fiscal measures on promoting healthier diets. Utilising a large out-of-home food purchase dataset from Great Britain in 2016–17, this paper analyses the demand for seven food groups across four outlet types, including restaurants, fast-food outlets, food retails and other outlets. We use a demand system approach to estimate price and expenditure elasticites of demand, along with procedures to account for censoring, expenditure and price endogeneity. Our results indicate substantial variations in consumer responses across outlet types. Demand for main meals is expenditure and price elastic in restaurants but inelastic in fast-food outlets. For sugary drinks, the demand is generally price elastic except in fast food outlets. These differences across outlet types highlight the complexity in studying out-of-home food and beverage consumption and the importance of accounting for where consumers buy from when designing, implementing and evaluating consumer responses to fiscal measures.