One of the blessings of our society is that food is readily available and actually pretty cheap--if you know what you are doing (most Americans do not). The staples of diet cost very little, yet many of us still have large food budgets. A 10lb bag of potatoes, a bag of dried beans, a dozen eggs and some bulk grains or flour could feed you well and good less than a couple dollars a day. Make sure you have some spices, some butter and milk and some oil to cook with and you're all set! Then all you need to worry about is filling that out with choice fruits, veggies and meats.
This is a bit of an extreme example, becuase your diet does not need to be so limited. But its good to start with a foundation and to understand where your money really goes. You primary sources of energy and nutrition can be shockingly cheap. You money goes to condiments, to packaged foods, to junk food, to restaurants, and to waste. Fruit and meat are expensive, but much less expensive if you cut out junk food and ready-made items. Look in your frozen food section--pound-for-pound, what are you paying? Then compare what you pay for fruit or meat per pound. You could eat steak every night without increasing your budget just by cutting out Stouffer's meals and trips to the convenience store.
Some people regularly spent $5/day at a convenient store--morning coffee and a bag of chips or pie. That's a $150/month habit. Others I know eat out every day at work for lunch. That's about $100-200/month just for work days.
While you're at it, just buy organic. I eat exceptionally well--high quality meats and organic foods make up a significant portion of my diet, yet my food budget is probably less than yours. The reason? I buy whole foods (minimally processed) and eat rarely in restaurants. I throw out very little. The nutritional quality of what I eat is also outstanding. The people that cry over a half gallon of organic orange juice costing $4.50 are the same ones who spend the same amount on a single glass of beer at a bar. I can make you a delicious and nutritious meal of organic, grass-fed hamburger on a whole grain bun, skin-on steamed potatoes and organic juice for less than the price of a happy meal at your favorite fast food joint.
If a dozen eggs costs $1.99, then that means that a 2-egg meal costs you 33 cents. I've seen onions and potatoes on sale for $0.99/lb. I can get bulk organic grains between $0.79-1.29/lb--the same price as generic bleached white pasta. At the local farmers market, I buy a frozen whole chicken for about $8 (gizzards and all) and throw it in a large pot for soup which feeds me and half of my friends for a week. A loaf of bread can now cost several dollars, but you can still bake your own for some cents. If you're really adventurous, go to a local farmer and buy a 1/2 pig or 1/4 cow and store it in your freezer. You may be getting top-of-the-line quality meats but paying moderately.
A good strategy is to bake your own bread and cook a large amount of food once a week. I usually do it on the weekends. While I do love cooking, I don't have to be slaving in the kichen several hours a day if I don't want to. You can load up your bread machine and crockpot one morning, come back several hours later and you have food for a week. Store extras in your freezer so you don't have to eat the same thing every day.
I mentioned throwing food away. Remember, its money. If you bought chicken on a super half-price sale for $2/lb, but ended up throwing half of it it away because you didn't manage it well and some of it spoiled and the rest you threw away for whatever reason, then you actually paid $4/lb for what you acutally ate.
So what are people doing wrong? Let's break it down:
1. They eat at restaurants, and not just as a social event but just to eat
2. They throw food away
3. They buy a lot of pre-packaged foods and go overboard on sauces and extras. The "basics" are extremely cheap
If you manage those 3 areas, you can eat an outrageously good diet full of very diverse and healthy, organic foods, and still come out a winner budget-wise than your peers. Let me also suggest here that a lot of people really do take advantage of sales and farmers markets and other ways of buying good food cheaply. But they lose a lot of that savings (maybe all of it) on bad restaurant decisions, mis-management of time (ie not packing a lunch) or inconsistency. People allow themselves to splurge and because they know they are saving money the rest of the time. The problem is that in the end they may be squandering it all. I believe the best bang for your buck is to have a consistent strategy that you can get the food you want without falling into these traps.