Mortgage rates in the early 1980s hovered near 19%—a figure that sounds catastrophic by today’s standards. And yet, many Americans bought their first homes and continued to eat at restaurants, despite double-digit interest rates and high inflation. By contrast, in 2025, mortgage rates are under 7%, yet housing feels increasingly out of reach, and dining out has become a luxury for many younger consumers.
This paradox raises a deeper question: how did families in the 1980s afford both a mortgage and meals away from home—and why does it feel harder to do so today?
Housing Costs in Context
The key lies not just in interest rates but in overall affordability. In 1980, the median U.S. home price was around $50,000, and the median household income was roughly $20,000. That put the price-to-income ratio close to 2.5x. Today, median home prices exceed $420,000 while median income has risen to about $75,000, pushing the ratio well beyond 5x in most regions. Even with lower interest rates, the actual mortgage burden for today’s buyers consumes a larger share of monthly income.
In practical terms, this means a 19% mortgage rate on a $50,000 house might have resulted in a similar—or even lower—monthly payment as a 6.5% mortgage on a $400,000 house today. In the 1980s, people were often buying smaller starter homes, and they entered the housing market with the understanding that they could refinance later. Today’s buyers face not just higher prices but also tighter inventory, intense competition, and limited prospects for meaningful rate relief.
The Squeeze on Discretionary Income
The result is that today’s consumers, especially younger ones, are left with less discretionary income. While spending on food away from home has grown over the decades—reaching more than 54% of total food expenditures—it’s now facing new headwinds. Mortgage or rent payments, student loans, rising healthcare costs, and other structural burdens mean that foodservice operators must work harder to earn every visit.
In the 1980s, despite economic instability, families could dine out without sacrificing other essentials. Restaurants—especially quick-service chains—were positioned as affordable indulgences. Pizza chains, burger counters, and family dining establishments thrived in part because they offered value at a time when value mattered. While inflation eroded purchasing power, housing didn’t absorb as much of a household’s budget as it does now, leaving more room for small luxuries like meals out.
Implications for Foodservice Strategy
The connection between housing and foodservice may not be obvious at first glance, but it’s critical. As shelter costs rise, restaurant visits are increasingly framed as optional. Consumers trade down from full-service to fast casual, or from fast casual to delivery and prepared foods. Menu pricing, bundling strategies, and value perception are now central to capturing a squeezed consumer.
For food manufacturers, this means adapting product portfolios and pricing structures that align with the realities of discretionary spending. In a market where affordability is defined less by interest rates and more by total cost of living, the battle for the food-away-from-home dollar has never been more nuanced.
Foodservice IP is a professional services firm aimed at delivering ideas for managers to guide informed business decisions. To learn more about FSIP’s Management Consulting Practice, click here.
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