Structural Change in Demand for FAFH
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University of Alberta Three Essays on Canadian Household Consumption of Food Away From Home with Special Emphasis on Health and Nutrition by Jeewani Fernando A thesis submitted to the Faculty of Graduate Studies and Research in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Agricultural and Resource Economics Department of Rural Economy © Jeewani Fernando Fall 2010 Edmonton, Alberta Permission is hereby granted to the University of Alberta Libraries to reproduce single copies of this thesis and to lend or sell such copies for private, scholarly or scientific research purposes only. Where the thesis is converted to, or otherwise made available in digital form, the University of Alberta will advise potential users of the thesis of these terms. 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Examining Committee Ellen Goddard, Department of Rural Economy James Rude, Department of Rural Economy Sandeep Mohapatra, Department of Rural Economy Vic Adamowicz, Department of Rural Economy Anna Farmer, Agricultural, Food and Nutritional Science Rudy Nayga, Jr. Department of Agricultural Economics and Agribusiness, University of Arkansas This thesis is dedicated to the memory of my loving father, TACS Tilakarante. I miss him every day, but I am glad that what I am today is what he always wanted me to be. Abstract Consumption of food away from home (FAFH) is widely believed to be a contributing factor to the current obesity crisis and other diet related problems in North America. At present, in Canada, a number of issues related to FAFH consumption such as the relationship between obesity and fast foods, trans-fats, sugar and sodium content of restaurant foods, and restaurant advertising for children are being widely discussed. In these discussions, it is apparent that the interrelationships between FAFH, nutrition and diet related diseases are complex. Therefore, there are significant gaps in our knowledge. In this study, a number of important research questions related to FAFH consumption were studied in order to provide a detailed understanding of FAFH purchase trends, nutrient demand trends, factors affecting these trends and to provide some idea of the possible effectiveness of proposed policy interventions in the area. In paper one of this study, a sample of Canadian FAFH purchases were analysed using a two stage demand model to examine the impact of industry advertising, households‘ habit forming preferences and socio-demographic and economic variables. Given the unique method of restaurant categorization, results provide new and additional information of the impact of above variables in Canadian context. The second study examined the demand for selected nutrients in FAFH to understand factors affecting nutrient intake in FAFH foods focusing on chain restaurants. An innovative measure of nutrient content (nutrient density) was used in the analysis and study results provides interesting new information about nutrient consumption from chain restaurants in the FAFH market. The third study examined how some specific food industry changes in product formulations aimed at reducing trans-fatty acids (TFAs) could and have affected consumers‘ overall diet quality and their demand for food away from home. This study provides some indications of effectiveness of the current trans-fat recommendations in Canada. In summary, this study is an empirical investigation of a number of questions related to Canadian FAFH consumption: What is the structure of the FAFH market in Canada? What are the households‘ FAFH purchasing patterns? What is the impact of advertising and habit forming preferences and socio-economic and demographic factors on FAFH purchases? What are the nutrition profiles of the most popular menu items of chain restaurants? What are the factors affecting nutrient demand in FAFH foods? Would a specific food industry change in product formulation such as reducing TFAs have affect consumers‘ overall diet quality and their demand for FAFH? In general, results from the three independent studies provide useful information to fill some of the gaps in our knowledge of FAFH consumption, especially on health and nutrition with implications for public policy. Acknowledgment It is a pleasure to thank many people who made this thesis possible. Foremost, I would like to express my sincere gratitude to my supervisor, Prof. Ellen Goddard. Her perpetual energy and enthusiasm in research had motivated me to complete my study successfully. Her guidance and support helped me all the time of research and writing of this thesis. Beside my supervisor, I would like to thank the rest of thesis committee: Dr. Sandeep Mohapatra, Dr. James Rude and Tomas Nilsson for their encouragement and insightful comments. The generous financial support from Co-operative program in Agricultural Marketing and Business, Consumer and Market Demand Network, Faculty of Graduate Studies and Research and Department of Rural Economy are greatly appreciated. My sincere thanks also goes to Robin, Dawn and other department support staff for always lending me their helping hand. I thank all my colleagues at Department of Rural Economy whose presence was helpful and memorable. I am indebted to my father for his care and love. Although he is no longer with us he is forever remembered. I am sure he shares our joy and happiness in the heaven. I cannot ask for more from my mother as she is simply perfect. Mother, I love you and wish you the best health and a long life. I feel proud of my sisters and brothers. Their love and encouragements meant a lot for me. Last but not least, this thesis is simply impossible without my loving Priyantha and my two dearest sons: Kaveen and Sarosh. Their unconditional love, patience, support and encouragements meant a world to me. They have been my greatest strength against all the disappointments, frustrations and draw back as well as the greatest joy of my achievements during my PhD program. Their love made me feel like I am one of the luckiest mom and a wife in this world. Table of Contents CHAPTER 1: INTRODUCTION .........................................................................1 1.1. BACKGROUND AND PROBLEM STATEMENT ....................................................1 1.1.1. Canadian Food Service Sector ...............................................................5 1.1.2. Advertising and FAFH ...........................................................................9 1.1.3. Canadian FAFH Consumer and Market Environment.........................13 1.2. STUDY OBJECTIVES ......................................................................................17 1.3. THE CONTRIBUTIONS OF THE DISSERTATION ...............................................17 1.4. DATA ...........................................................................................................18 1.5. ORGANIZATION OF THE DISSERTATION ........................................................18 1.6. REFERENCE LIST ..........................................................................................20 CHAPTER 2: FACTORS AFFECTING DEMAND FOR FAFH WITH ADVERTISING AND HABIT FORMATION .................................................25 2.1. MOTIVATION ................................................................................................25 2.2. THE RESEARCH OBJECTIVE