It depends on what you consider groceries I suppose. Are you only counting food and drink? Where do you put toiletries, cleaning and general household supplies?

$1k/mo does seem a bit high, but not unreasonable. We do a lot of budget shopping (Costco, coupons, generics, almost no organics, and usually split a side of beef with friends). Meat has gotten really expensive, and I would definitely consider that to be part of the American Dream.