Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
Over the weekend, I ran across a rather provocative article that argued that it’s now cheaper to eat at a restaurant than to eat at home. Apparently the frequency with which consumers are dining out has been on the rise since mid-2009, presumably since contracting during the worst part of the recession and stock market collapse, and the writers at The Fiscal Times think it may have something to do with cost.
The underlying argument is that, due to ever-increasing groceries prices, it’s gotten increasingly expensive to eat at home. At the same time, restaurants are better able to deal with such increases by buying in bulk and/or absorbing a portion of the cost in terms of reduced wages — especially if they can tranform their workforce using über-cheap teen labor.
In fact, supermarket prices have been increasing at 6%/year, roughly 2.5x faster than restaurant prices. But still… Cheaper to eat out? Doesn’t seem likely. They went on to provide a handful of specific comparisons to support their case, but their logic is a bit suspect.
For example, when comparing the cost of a steak dinner (complete with soup, salad, and aparagus) at Outback Steakhouse to eating at home, they figured in the cost of an entire bag of salad as well as an entire bunch of asparagus. And they ignored the cost of drinks, which are a huge profit center for restaurants — $2.50 for a Coke, anyone? And they also ignored the cost of leaving a tip.
So now tell me… Who amongst you eats an entire bag of salad with your dinner (assuming that you buy bagged salad in the first place). And who would sit and eat an entire bunch of asparagus alongside their 10 oz. ribeye and entire bag of salad? Clearly, such costs should be spread out over multiple meals (or multiple diners).
They then proceeded to make similar comparisons — with similarly flawed assumptions — at Olive Garden, Red Lobster, P.F. Chang’s, and the Cheesecake Factory. According to their math, eating at home was only cheaper in two of their six comparisons (Red Lobster and Cheesecake Factory).
Of course, these comparisons also ignore the convenience factor as well as the value of your time. That being said, there are so many ways to interpret those factors (e.g., some love to shop and cook, others view it as drudgery, some value the convenience of eating at home, others love the restaurant experience) so it’s probably safest to leave them out.
Another thing to consider is that your personal circumstances will also have a huge effect on the outcome. When cooking for a family, it’s much easier to take advantage of economies of scale and dramatically reduce the per-serving costs. And don’t forget about store and manufacturer coupons. Many bargain shoppers save tons of money with coupons.
With all of this said, I’m curious. How many of you think that eating out at a restaurant is cheaper than eating at home? Regardless of the cost, what’s your preference?
There was a time when we really enjoyed the convenience of a quick bite at a restaurant. But as our family has grown, we’ve increasingly come to value the convenience of not going out. After all, once you load everyone into the car, agree on a restaurant, wrangle the kids orders, etc. the convenience factor is wiped away. There are also lots of ways to save money on groceries as well.
And don’t forget about the health benefits… By eating at home, you avoid many the many temptations of that dastardly restaurant menu, menu that you will often eat more healthfully if you eat at home (see also GetRichSlowly’s article on how to keep eating healthy affordable). Or at least that’s been my experience.
What do you think?
Source: The Fiscal Times via Business Insider
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (536)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (329)
- How Much Should You Pay a Babysitter? (288)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)