Don’t Bite the Hand That Feeds You: Food Pantries and Food Retailer Profitability

Abstract

This paper examines the extent to which the presence of food pantries diverts food sales from retail grocers. Hunger-relief programs, such as food services provided through food banks, serve as emergency assistance to meet households' temporary food needs, yet a growing population in the United States regularly relies on these services. There is little empirical research that examines just how individuals factor hunger-relief programs into their planning horizons, whether the presence of these organizations diverts sales from grocers, and how that affects food retailers' revenues and profits. Further, the presence of multiple grocers in one market constitutes a common good problem, given that the savings in food waste disposal fees occur for each retailer privately, while a potential reduction of total demand affects all retailers' sales. Using data on the location of food pantries and annual sales volume from retail grocers in Arizona, we measure the statistical relationships between food pantry density and retail grocers' annual sales volume. Preliminary results show that food pantry presence does not statistically, significantly affect retailers' revenues, suggesting that food pantries and food retailers do not directly compete for market share.