I sometimes see claims that poor people become obese and develop "lifestyle diseases" (heart disease, diabetes, etc) because they cannot afford healthy food and are forced to eat fast food.
Logically, this does not seem to make sense. When you buy fast food, you are paying for labor, corporate overhead, restaurant space, etc. How could that be cheaper than cooking for yourself?
How could that be cheaper than cooking for yourself?
Alternative to fast-food is buying fresh ingredients and preparing food yourself. Problem is that fresh produce retail price is constantly growing due to growing margins, rather than on par with underlying producer's price. This phenomenon is not local to any country, it has been observed in the US, throughout Europe, in Australia and New Zealand. It's attributed to super/hyper-market chains having too much influence over prices on both ends of the chain (producers and end-clients).
Some papers and articles covering the subject: Thomas Worth The F.o.b.-Retail Price Relationship For Selected Fresh Vegetables (bit outdated)
The f.o.b. [Free-on-board shipping-point prices] and retail price trends are rising for all of the selected commodities. Prices for the second time period, 1980-99, are presented in figure B-1. The solid lines in the graphs represent a two-year moving average for retail and for f.o.b. prices. Retail prices consistently rise during this time period. Except for potatoes, f.o.b. prices rise consistently, albeit modestly, as well. The retail-f.o.b. margin increases for all of the commodities.
Fresh produce growers/shippers believe that consolidations in grocery retailing may empower retailers to act less competitively. This study evaluates the extent to which retailers exercise market power in buying from growers and selling to consumers. Sales data for retail chains in six U.S. metropolitan markets are used along with data on grower prices for an analysis on apples, grapes, oranges, and grapefruit. The evidence varies by commodity, but does consistently point to the exercise of market power by retailers in consumer sales; less support is found on buying market power. Market power varies over time and with produce volume.
News article "Rising costs force fresh fruit and vegetables off the table"
The number of people who say they have been forced to skip fresh fruit and vegetables because of skyrocketing prices has jumped from 6 to 30 per cent in six years. And retailers have been accused of profiteering from this year's flood and cyclone disasters, hitting shoppers with 300 per cent mark-ups.
In one case, a farmer found pineapples being sold at a small fruit shop for 14 times the price paid to growers for the same produce.
When you buy fast food, you are paying for labor, corporate overhead, restaurant space, etc.
The same can be said about supermarkets. You are also paying for the produce that will go to the dumpster at closing time. Much less so in case of fast food establishments, which use mostly processed and/or refrigerated products and have limited variety.
The price of healthy and specially fresh products is always on the rise, but as of 2011 I still cook my -healthy- food myself for considerably less than a Mac Menu or equivalent costs.
There are entire websites dedicated to the subject of budget healthy cooking, but in my opinion the most important and universally applicable tips regardless of the country are:
In the countries where I lived (Ireland, France, Spain, Italy) I also saved a lot of money by buying at local shops, where you usually get discounts for being a good client, and where you might get to know even the actual producers/fishers. I don't know if this applies elsewhere.
I also find the quality of frozen-at-sea fish excellent for a fraction of the price.
UPDATED: References
This is going to be a very subjective question, even more so depending upon where in the world you are and what your motivations are. Thus, for the purposes of this answer, I am going to assume that it is for someone living in the United States and is concerned with saving "real money" (i.e. what is in their wallet) versus any subjective costs due to time invested in cooking or other time invested in preparing meals.
First, we need to look at this question from the standpoint of day to day meals. While some of the other answers and their comments cite a fairly expenditure for foodstuffs, I am going to approach this from the standpoint of someone that is going to make a dedicated effort to save as much money on their meals as possible. Thus, they will be looking for meals that are inexpensive, filling, nutritional, and generate leftovers. The leftovers might be a significant point that is lost in some of the other answers as a meal that costs $5 for the ingredients but generates 8 servings has a cost of $0.625 per serving which automatically puts it under the $1 per serving that some fast food restaurants offer on their "Dollar Menu". Finding such recipes is fairly easy, although inflation and availability of ingredients may affect costs over time.
If you search online you can find a number of anecdotal and other articles ("How I Eat for a Month with Twenty Dollars", "Eating Well On $1 A Day", "How To Live (Comfortably) on $36 A Month For Food") that demonstrate that living on a highly limited food budget is possible with a bit of creativity although a learning curve is involved. If we compare this to the aforementioned dollar menus and assume that people would at least two meals ($2 a day) for an average of 30 days gives us a budget of around $60 dollars. However, if you examine the nutrition information available from McDonald's you will note that most Dollar Menu items are not high in calories and thus someone may be tempted to order more due to hunger and the perceived "low cost." Once this starts to occur, the daily cost of eating fast food is going to go up high than the aforementioned $60 a month which could bring it well in the range of the low estimated average of $112.25 per person, per month back in the 2003 - 2004 time frame. Even factoring inflation and other rising costs, it is not hard to see how purchasing off the Dollar Menu can bring you within the lower average cost for a single person to eat.
Next, to approach the question from the standpoint of long term costs such as heath, it is generally accepted that there is a clear connection between fast food and obesity. Since obesity is connected to higher health care costs, we can likely conclude that over the long run any short term savings would likely be wiped out by long term expenses. Although depending upon someones income level, that burden might be bore by the state as opposed to the individual.
Finally, a new study by the UDSA has shown that the cost of food really depends upon how you measure it. CNN summarized things as follows:
For instance, take a chocolate glazed donut. Each donut is probably about 240 calories, and you could probably eat two or three of them with no problem (and just a teensy bit of guilt). Then take a banana with about 105 calories.
If these two cost the same, the banana is more expensive per each calorie eaten. But you’ll probably only eat one and feel a lot fuller afterward, Carlson said. That makes it cheaper per edible gram and per the average portion.
First, I want to elaborate a bit on the economics behind some of this. As many people already mentioned, this is going to vary greatly from country to country. Why? Well, raw commodity prices are very volatile, due to varying government subsidies, differences in climate, extreme climatic events, supply chains, &c. The supermarket industry in the US is extremely competitive. SuperValu, for example, is a giant corporation that owns many supermarket chains. They are lucky to eek away a 1.5% profit margin. (In other words, at most 1.5% of their gross income is a profit.) That means they could lower their prices at most ~1.5% without taking a loss. Bulk sellers like Costco and even the giant Wal-Mart are lucky to reach 3%. Successful fast food restaurants like McDonalds, on the other hand, easily reach a profit margin of 20%. That means, in effect, McDonalds could reduce their prices by ~20% and still stay afloat.
Why is this? One major reason is that companies like McDonalds can and do have complete vertical integration of their supply chains: McDonalds raises their own cattle, grows their own potatoes, transports their own raw ingredients, and largely owns the real estate of their restaurants. In fact, McDonalds even makes a profit off of leasing their real estate to McDonalds franchises. That flexibility is partially one reason why a Big Mac will be worth the equivalent of US$10 in Brazil while the same Big Mac will be worth US$1.50 in Croatia. Supermarkets don't really have much opportunity for vertical integration unless they actually buy and operate their farms and suppliers.
Now, to the question of whether eating fast food is cheaper. As I mentioned in my answer to the food deserts question, at least in the US there is a definitive link between poverty, obesity, and lack of proximity to a supermarket. There was also a study in the UK that discovered a correlation between the density of fast food restaurants and poverty:
Statistically significant positive associations were found between neighborhood deprivation [i.e., poverty] and the mean number of McDonald’s outlets per 1000 people for Scotland (p<0.001), England (p<0.001), and both countries combined (p<0.001). These associations were broadly linear with greater mean numbers of outlets per 1000 people occurring as deprivation levels increased.
Update: I re-wrote the following paragraph to include a rigorous argument.
Let's have some fun now and look at the Consumer Price Index (CPI), which estimates average expenditures for various goods over a month. The current CPI in the US for food and beverages is $227.5 (meaning that the average consumer spends $227.5 per month on food and beverages). Now let's assume that the cost of non-fast-food is cheaper than eating fast food and proceed with a proof by contradiction. Under this assumption, the CPI of $227.5 is obviously a lower bound on the amount one would spend if one only ate fast food (since the CPI includes all types of food-related expenditures). This equates to about $8 per day. In 2008, the average price of a Big Mac in the US was $3.57, and it is certainly possible for one to subsist off of two Big Macs per day. That's especially true since a Big Mac is one of the more expensive items on the McDonalds menu. A McDouble, for example, costs only $1. This is a contradiction, i.e., we have shown that it is in fact possible to live off of less than $8 a day of fast food, thus breaking the lower bound and invalidating our assumption that eating non-fast-food is cheaper than eating fast food.∎
This suggests that it is at least plausible that eating fast food could be cheaper than grocery shopping in the US. This is of course under some tenuous assumptions, but one can't really definitively answer your question without actually studying the average cost of groceries.
In the affluent world, when you cook for yourself, the cost of time forgone is very large, because hourly wages are very high (relative to the poorer parts of the world).
Take the US. Even if you make the minimum wage ($7.25/hr), if it takes you 20 more minutes to prepare and cook your own food (and then clean up after and all that) as compared to getting something from McDonald's, that's $2.42 in wages you've forgone. With that money you could get two items from the dollar menu (two McChickens say) and still have change leftover. And of course I haven't even counted the cost of your groceries, wear-and-tear on your cooking equipment, utilities, etc. that go towards making your own meal.
