Introduction
Household expenditure is an important indicator of a household’s living standards and spending behaviours. It also serves as a key measure of economic activity. Understanding household expenditure patterns is crucial for policy decisions that ensure household welfare and economic growth.
Within household expenditure, food accounts for the largest share, making it a primary area of concern for policymakers. Post-pandemic, Malaysian households exhibited a significant shift in the types of food they spent on. This necessitates further examination to understand how different households adapt to the shift in food spending, which may provide insights into the underlying drivers of this change.
Overview of Household Food Expenditure Trends
In the past, Malaysian households prioritised cooking at home over dining out. For example, in 1993, households allocated two-thirds of their food expenditure on foods purchased from grocery stores, markets and other food stores that are meant to be prepared and consumed at home, broadly defined as food at home. This includes rice, noodles, vegetables, fruits, meat, seafood, bread and confectionery. Only one-third of household food expenditure was spent on food away from home, including food obtained from restaurants, cafés, street stalls, vending machines, cafeterias and school canteens.
During the pre-Covid-19 pandemic years (2014 to 2019), Malaysian households allocated over half of their total food expenditure to food at home. During this period, food at home expenditure grew at a compound annual growth rate (CAGR) of 3%, while food away from home spending rose at a faster rate of 6.5%. Post-pandemic (2019 to 2022), the CAGR for food at home slowed down to 2.4%, whereas food away from home spending accelerated to 9.4%.
This shift resulted in the highest recorded share of food away from home spending, with 48.4% of total food expenditure in 2022 going toward out-of-home meals. This means Malaysian households now spend nearly equal amounts on food at home and away from home.
This shift in food preference is driven by several factors, ranging from rapid urbanisation, income growth, rise in dual-income households and modernisation of the food environment to increased female labour force participation. Online food deliveries, which gained momentum during the pandemic as people faced movement restrictions and on-premise dining was suspended, also contributed substantially to the post-pandemic rise in food away from home spending.
In real terms, household expenditure on food at home has remained relatively constant despite the consistent rise in its nominal value. This suggests that the rise in nominal food at home spending is mainly driven by price increases. On the other hand, the spending on food away from home in both nominal and real terms has been growing, indicating that households are either consuming more food away from home in general or opting for more expensive options, such as dining at or ordering from full-service restaurants. Such growth seems to have accelerated post-pandemic, likely due to the increased access to outside meals via online deliveries.
Food Expenditure Trends by Household Characteristics
Households tend to exhibit varying food spending patterns, given that sociodemographic factors significantly determine food choices. To truly understand the drivers behind the shift in food expenditure patterns, it is crucial to identify how this trend differs across households based on their sociodemographic characteristics. This section explores the variations in household food expenditure patterns by four characteristics: strata, household size, age group of the head of household and income level.
Strata
Urban households generally spend significantly more on food due to higher food prices in urban areas. For instance, the consumer price indices (CPI) of food at home and food away from home are on average about 5% higher in rural areas than in urban areas between 2010 and 2023. Interestingly, urban households have been allocating nearly the same amount of expenses to food at home as rural households, but their spending on food away from home is significantly higher.
As illustrated in the figures, urban households have been dedicating a larger proportion of their food expenditure to eating out compared to rural households. In 2022, the proportion of food away from home expenditure surpassed that of food at home, making it an integral part of the diet among urban households. In comparison, food at home still constituted the bigger proportion of the expenditure of rural households, though its share in the food expenditure is increasingly substituted by food away from home over the years.
This growing preference for outside meals in both urban and rural areas may be driven by a different set of factors. In urban areas, food choices are generally more abundant and diverse, with a high availability of food service establishments that are mostly accessible via food deliveries. Another reason for high food away from home consumption among urban families is convenience. Greater time constraints due to long commuting times, employment and rising care burden as well as lifestyle changes associated with urbanisation also contribute to the demand for foods that are readily available.
Although dining options and food delivery services remain limited in rural areas, rural households can obtain food away from home from sources like hawker centres, street stalls and markets. Furthermore, households in certain rural areas may still manage to enjoy the eating-out experience by travelling to nearby towns that offer more food choices. Besides, it is noteworthy that foods obtained from institutional dining settings, such as canteens, cafeterias and refectories account for 13.6% of the food away from home expenditure of rural households. In comparison, those living in urban areas only spend 6.5% of their food away from home budget on such foods. This reflects the difference in food away from home sources between urban and rural households, which may be due to the variations in their lifestyles and food environment.
Household size
Historically, bigger families tended to prefer cooking at home over dining out due to economic reasons; they got to enjoy greater savings on eating at home than dining out due to the economies of scale from bulk purchasing food ingredients. Larger families with young children may also prefer to cook and eat at home to manage their children’s food requirements and eating behaviours. However, with the growing preference for and availability of food away from home, this consumption pattern traditionally linked to household size has also shifted.
In 2009, all households, except those comprised of single adults, primarily spent on food at home, with the expenditure increasing as households expanded. In contrast, single-adult households allocated nearly similar parts of their food spending on both food at home and food away from home. The rise in food expenditure as households expanded was mainly driven by the greater expenses from consuming home-cooked foods.
This suggests that food away from home used to play a supplementary role for bigger households, but with urbanisation and lifestyle changes, its significance has grown. Although a relatively bigger proportion of household expenditure was still spent on food at home, households have gradually expanded their budget for food away from home. This shift in food consumption patterns is particularly evident among bigger households.
In 2022, households with three to six members spent nearly half of their food expenditure on dining out or ordering in, a significant rise for this category of food, which used to account for only one-third of the food expenditure. Single-adult households, on the other hand, showed little changes in their food preferences and continued to distribute their spending almost evenly between food at home and food away from home.
Taken together, the data shows that bigger households increasingly eat out more often, suggesting that the benefits and convenience of dining out or ordering in outweigh the economic savings big families used to enjoy from buying ingredients and preparing meals in bulk. In addition, it is plausible that bigger families may now enjoy greater economic and time savings from buying outside meals instead of preparing big servings of food at home.
Age group
The age of the head of households is another determinant of household spending decisions as their spending priorities and food preferences often reflect their household needs and demands, which can vary across different stages of the family life cycle. For instance, young households generally start with relatively low earnings, which limits their spending. As households age, their income grows with accumulated skills and experience, contributing to greater purchasing power and stronger preferences for discretionary expenses, like dining out and leisure activities.
As households begin family life by marrying and having children, they may incur additional expenses to accommodate the growing needs of an expanding household. Household income and family size eventually peak late in middle age. Post-retirement, household income drops below its previous level, and the size of the family shrinks as children move out, leading to another adjustment in spending patterns.
In 2009, middle-aged and older households primarily spent on food at home, while younger households allocated a comparatively larger proportion of their food spending to eating out. These observations were consistent with past studies, where the likelihood of eating out was reported to decline as the age of the head of households increases. However, with changing food preferences and lifestyles, all age groups are gradually adapting to the shift towards food away from home.
The degree of this shift, however, is not uniform across age groups. When examining the share of food away from home in food expenditure, all age groups have been allocating a larger proportion to outside meals, but this change was more pronounced among households headed by those aged 35-44 and 45-64. For these middle-aged households, the share of food away from home increased significantly.
Income
Food away from home consumption tends to correlate with income status; higher income households are generally more likely to afford to eat out more often, whereas lower income households rely more on meals prepared at home. Although the income gradient in food spending patterns remains among Malaysian households, the differences between income groups have widened.
As household income rises, the amount spent on food, particularly food away from home, also increases. Although higher income households spend more on food, their total food spending represents a smaller proportion of their total expenditure due to their relatively higher disposable income. For lower income households, food expenditure accounts for a more significant share of their expenditure; in 2022, households from the lowest income decile (D1) spent a total of RM746 on food, equivalent to 38.1% of their total household expenditure.
During the pre-pandemic years (2014 to 2019), household food spending showed no distinct growth trends across income. However, post-pandemic, food spending patterns began to diverge across income deciles. Lower income households continued to consume more food at home and food away from home, while higher income households showed strong growth in food away from home but slower to negative growth in food at home. This trend follows the income gradient: as income rises, consumption of food away from home increases while the intake of food at home declines. Notably, middle-income households also experienced high growth in their food away from home consumption.
The results suggest that lower income households still prioritise home-cooked meals while also increasing their budget for eating out or buying outside meals. But as households move up the income ladder, they increasingly favour eating out, buying outside meals and ordering in over preparing meals at home. The widening differences in food spending across income levels suggest that financial means, or purchasing power, is one of the key factors driving the increased preference for food away from home.
Concluding Remarks
Once considered a discretionary or indulgent expenditure, food away from home has become a core part of the Malaysian diet. While the eating-out trend is progressing at varying rates across households with different characteristics, this change in food preference is evident among all groups, highlighting the importance of food away from home for Malaysian households. The more pronounced growth in food away from home consumption among bigger, middle-aged, higher income households suggests that higher purchasing abilities, combined with urbanisation, improved food accessibility, changing lifestyles and evolving family needs, are driving this shift in food consumption. Recognising these trends is crucial in enabling policies and initiatives that are responsive to the evolving and varying needs of households.
