Demand for food-away-from-home: A multiple-discrete-continuous extreme value model

Policymakers have suggested the use of taxes to raise the relative cost of buying fast food. Yet, little is known of the structure of demand for food-away-from-home (FAFH) in general. This study provides estimates of the price-elasticity of demand for four different types of FAFH using a new data set from NPD, Inc. and an econometric approach that accounts for the multiple-discrete-continuous nature of FAFH demand. We find that cross-price elasticities of demand are small, so consumers are unwilling to substitute between food-at-home and any type of FAFH or among types of FAFH. Therefore, taxing fast food may be effective in reducing the number of fast food visits and shifting consumption to at-home meals.