IMO, grocery shopping is a version of the engineer's triangle ("good, fast, cheap -- pick two"). Except to me it's more like a square: Cost, principles, quality/"gourmet," effort.
Cost is self-explanatory.
By "principles" I mean things like organic foods and free-trade coffee, or paleo, or GF, or other choices driven by personal priorities/health concerns.
Quality/"gourmet" is things like fancy cheese, prosciutto, pineapples/pomegranates -- all the things that are "treats" but cost more because they are not local/seasonal or have a lot of effort put into them.
And then effort reflects your willingness to do things from scratch (e.g., even canned beans tend to be expensive when compared to dried).
The fundamental problem you have here is the same one I have: we have certain principles and gourmet things that we like that drive the costs up. And those things are always going to cost more than the available cheap sources of protein/carbohydrates/vitamins. And personally, I am also not willing to devote the time to soaking my beans and baking my own bread (might do it when I retire, but not while we have two jobs and two kids to manage).
Note that none of these choices are "bad." But they are all inconsistent with "cheap." It is entirely possible to eat a healthy, balanced diet for a fraction of what you and I spend every month -- it would just depend on a lot of pasta, potatoes, frozen veg, and whatever protein and produce was on sale that week.
So what I have been doing is not so much focusing on the specific dollar thresholds, but testing each of those quadrants to see how much I can cut back on those extras and still meet my real priorities and keep everyone happy. For ex., when I shopped at Wegman's all the time, every week involved some version of deli and cheese -- the cheap weeks were probably $20, the bad ones were probably $60. Honestly, it was lazy and excessive and unhealthy -- it started out as "OMG, I can't believe they have all this delicious stuff!" and quickly became a weekly treat and a bad habit. Then I shifted to ALDI, and hey, they don't have prosciutto di san daniele, or taleggio, or any of those delicious temptations -- and that makes it very easy to avoid that temptation. Huzzah, victory, right? Except then after about a month, DH was getting really, really cranky, because he wants his damn genoa and prosciutto, and he makes plenty of money, and he doesn't understand why I'm being so pissy about the grocery budget and why won't I just buy some damn deli? So I am finding the compromise level that will work for all of us longer-term: now I am buying cheaper options at ALDI when I can find something DH will be happy with, and splurging on the real thing at Wegman's or the local Italian deli maybe once a month.
Same result with frozen veg -- boy, they're cheap, but none of us really like veggies that much to start with, and I couldn't figure out how to cook them to make them not disgusting. So now I just buy whatever fresh stuff is reasonably priced that we will eat.
I am spending more time now on the shopping and cooking, but for the most part I am devoting that time to menu planning vs. bread-baking, because limiting the amount of food that I buy and minimizing food waste seems to offer the best $/hr return. Plus, you know, we're lower-carb, so there's not a lot of bread involved anyway. :-)
Etc. YMMV of course. The point is I've given up on perfect and am focusing on what is reasonable for us, for where we are right now.