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Cheaper to Eat at a Restaurant than at Home?

Written by Nickel - 23 Comments

Cheaper to Eat at a Restaurant than at Home?

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

Published on December 5th, 2011
Modified on December 20th, 2011 - 23 Comments
Filed under: Frugality

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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23 Responses to “Cheaper to Eat at a Restaurant than at Home?”

  1. 1
    mjs Says:

    We eat out when I win a gift card to Shari’s and to Outback, never order beverages only water with lemon in it, figure out a great tip for Shari’s waitstaff and only go when our favorite server is at Outback..also the same at Stuart Anderson’s with a bogo buy one get one free, never order beverages there either..We don’t go out often unless I win the gift cards and I have a lot of spare dollars for the tip..it is far easier to cook at home for us, I use coupons until I could scream, I walk back to one store and get my coupon money if I forget, they know me there and at Target too!!!! I am a skinflint and most restaurants salt shaker is too heavy on my food and the best Salmon at the one place that makes it I get it to go, no tip and they throw in a rice they can make far cheaper than I could almond basmati, oh, my it is yummee, but even that I watch the paper for a coupon on that salmon dinner they honor it at the place to go and the free rice, I could never buy it and make that dinner for only $10.00 (incl. tax) free bamati almond rice..Salmon runs about $20.00 a pound here and it caught not too far from our home to boot..We have watched food prices soar, gasoline is nearly 4.00 a gallon and we are really frugal and walk, ride a bus everywhere..stores are close and one can get great produce cheap at a new place we walk to so we are good to go..why do people throw their hard earned money going out to eat? we will never do that, I am an excellent cook, so is the hubby, grocery stores are having a hard time of it too, if people only ate out many would not have hours to make a paycheck, just saying, happiest of the holidays, enjoy your blog..just saying!!!!!!!!!!!!!!

  2. 2
    Jennifer Says:

    Preparing meals at home has certainly saved my little family a good bit of money. When we do eat out, we try to go to places that don’t require a tip and/or we have a coupon that offers substantial savings. I just have a hard time believing that dining out is ever cheaper than preparing meals at home, unless you eat solely off the dollar menu at McDonalds. And eating at home is most definitely healthier, so long as you stay away from the pre-packaged meal options, which will also save money in the long run.

  3. 3
    Steve Says:

    If eating out wins for the steak house comparison, you know there has to be something flawed in the comparison. My wife won’t eat at a steak house because the gap between price of ingredients and price of finished product is so big.

    I agree with the comment, that with (small) kids it’s actually more work to eat out than prepare a meal at home.

  4. 4
    SomeGuy Says:

    There are so many different ways to slice this kind of comparison. For example, as Nickel alluded, household size has a dramatic impact on the ratios. When considering eating in, it is easier for a family of 5 to get economies of scale and a lower cost per meal than it is for a single person. This affects another factor that makes at-home dining more expensive: waste. If you are single, or a couple, that bag of salad you bought and used 1/4 of for the steak dinner may end up going bad before you can finish it. Another factor that SomeGal and I use that significantly decreases dining out expenses is groupon and other local deals. Those are often 50% off. I haven’t kept stats but I would wager that our average running “save” on eating out is around 40%.

    There are also softer factors that I think can favor eating out. For example, no one has to spend time making the meal,cleaning up and doing dishes after a meal out. Also, selection is much higher. To continue the bag of salad example, maybe we just don’t want to eat salad every night for most of a working week. Also, this comes into play as folks are increasingly vegatarian, vegan, celiac, et cetera. Preparing two or more different meals at home has to tip the scales somewhat more in favor of eating out.

    To Steve regarding the steak comparison: In our part of the country, raw meat of the quality served at the good steak houses is very expensive. It can easily cost $25 per serving for the best prime, aged strip steaks. You can certainly get cheaper stuff, like the couple day old non-prime for $8/lb, but then that isn’t apples to apples.

    Also, SomeGal and I never drink soda pop, and almost always just drink water when eating out or eating in. So those expensive Cokes don’t factor at all into our equation.

  5. 5
    Steve Says:

    @SomeGuy – the prime, aged steak is what you would get at the steak houses where a meal costs $100 per person. The $8/lb stuff is what you get at Outback. Either way, it costs 3 to 4 times the price to have someone else cook the meat, when you compare apples to apples.

    Granted, professionals are better at cooking meat than I am, personally. (Which is why I don’t cook $25/lb meat myself.) But with practice that could be overcome. And per Nickel’s post, the math doesn’t take “the convenience factor as well as the value of your time” nor one’s cooking skills into account, since such things vary and are hard to quantify.

  6. 6
    youngguy Says:

    When i read the title i laughed, me and my girlfriend live together we can spend $60 – 75 at the grocery store and have breakfast lunch, dinner , snacks, drinks etc and were far from Coupon freaks. All we use is the grocery store savings card.

    If we go out to dinner at a cheap restaurant say a red lobster or Fridays or ruby Tuesdays than an easy $45 tab

    2 nights at Fridays easily surpasses our weekly budget at the grocery store

    plus thats not even including lunch and breakfast just dinner.

    Anytime you can buy 1lb of ground beef for $2.75 it is damn near impossible to get cheaper meals at eat in restaurant

    i just dont see how that makes since at all

  7. 7
    youngguy Says:

    To elaborate on my situation more,

    I live in a Major American City.

    I can purchase breakfast for 7 days under $15 .. Waffles, Eggs , bacon , biscuits etc

    All produce and meat gets purchased in the Italian market (much cheaper than grocery prices this is where i got the $2.75 pound of fresh ground beef over the weekend)

  8. 8
    Bay Area Guy Says:

    It really depends on the varieties of the food you eat. If you just eat one kind of food then it would definitely be cheaper to eat them at home. For example, I can’t imagine buying all those ingredients for a Korean dinner is cheaper than going to a Korean restaurant. I also can’t imagine preparing a Korean dinner at home with all those little dishes. How about cooking rip for two persons. The time it takes to cook rip. 10 hours? Beside, do I really want to make rip for just two of us.

    With that being said, I definitely eat at home on weekday since it is more convenient than going out.

  9. 9
    Kurt Says:

    I think we need to factor in higher indirect costs typically related to eating out. Though healthy choices may be available, be honest–when we eat out, most of us go for the fat laden, high calorie, salted, large portion stuff. The lifetime additonal cost in medications (high blood pressure, statins, etc.), personal coaches, diet fads, incremental medical care related to obesity and diabetes, etc. can in part be traced to what we eat. It’s a lot easier to control what we eat and how food is prepared at home.
    Thanks.

  10. 10
    Nate Says:

    I guess it depends on what is being talked about. Generally, no, I don’t think it’s cheaper to eat out ALL THE TIME over cooking meals at home, but there are certain specials and deals where it’s probably close.

    We don’t usually go to sit down/tip paying restaurants with our kids and when we usually go, we either use coupons, get the specials or the value meals. We hardly go to sit down restaurants when it’s just us without the kids too, but do occasionally.

    We do like to eat out, but we probably don’t do it as much, especially compared to some others. It’s fun to go out and sometimes enjoy the time away from the house or not having to cook a meal.

  11. 11
    Travis @DebtChronicles Says:

    I don’t know how anyone could possibly argue that it’s cheaper to eat out at a restaurant. For my family of 4 to eat at even a fast food restaurant for a meal is at least $25. Multiply that by 7 days a week, and that’s $175 – for just ONE meal a day. Not to mention the other two meals of the day, and snacks. I spend about $100 a week on groceries for my family….sooo much cheaper to eat at home.

  12. 12
    Maggie@SquarePennies Says:

    Eating at restaurants exposes you to a lot more health hazards than eating at home. Not only do sick employees of the restaurant handle the food, but the dishes are loaded with fat and salt. I enjoy a meal out now and then, but the best meal is still at home. I’ve been enjoying finding great recipes to add to our rotation. The bonus is that they are inexpensive!

  13. 13
    Rich Says:

    Somebody’s not calculating the total cost, I think. Restaurant food gives you almost no quality control over content – and man-made (and man-modified) foods do correlate with higher health costs, long term (not to mention that the loss of an aspect of your health (be it in mobility, cognition, pain-free living, etc.) is priceless). I’d rather eat less food of higher quality than more of the chemical cr@p that passes for food, nowadays. You still get what you pay for, and the biggest bargains in food, long term, are still with going as natural as you can get.

  14. 14
    SomeGuy Says:

    @Steve: Obviously there are regional differences. We don’t live in BFE by any means, and the best steak houses in town charge $30-$35 for a 6-8oz filet or 12-14oz strip. I can get good results at home using an iron skillet at maximum heat to sear the outside and then finishing in a 550F oven, but it’s more hit or miss and it’s pretty smokey.

    @Rich: Would you please cite a few reputable peer-reviewed journal articles showing the correlation you mention?

    @Travis: As a number of folks have pointed out, as household size increases so do the economies of scale for eating in.

    @Kurt: I agree, but only to an extent. I know a lot of folks who are overweight or worse and who get fairly healthy home-cooked meals regularly. But the same lack of self control that might lead them to overeat or eat poorly at a restaurant also leads them to resent the healthy meal and they end up eating really bad stuff in between. Bottom line, I think the core issue you are talking about may be a lack of control/willpower, moreso than an availability issue.

  15. 15
    Rich Says:

    @Steve: I’m in a rush to work, but ran a quick, coarse search on longevity re: food quality. Here’s a link:
    http://scholar.google.com/scho.....i=scholart

    If you want to research more, I’m usually short on time but would help as I could. For example, there’s a whole group of people who consider organic “extreme,” and as with any area you can’t just make a blanket statement (just quickly off the top of my head I can realize that unhealthy eating habits are just that: habits; leptin research needs work; gluten/casein, etc. – allergies always play into health; the impact of accumulated pesticides and other chemicals simply can’t be measured – because there’s no funding for studies that might shine a light on the broad family of man-made pollutants in our food, water and air; the overall levels of dehydration in the population, etc. (my apologies; there are just so many factors that can be added – but my bottom line is that you just do the best you can in choosing and preparing food, in exercise, hydration, mental and physical rest – and in trying to become as educated as you can)). If I pay $1 more for organic celery but I’m not eating the pesticides that it holds on to, I’ll consider it both a short- and long-term investment, at least in quality of life — but I also feel I’m getting off cheaper (I’m 59 and have needed a doctor’s visit 3 times in the last 15 years; it’s not grossly genetic (siblings on the common diets are rife with problems, and in my younger years I got sick much more frequently)).

  16. 16
    Kelly Says:

    We definitely eat cheaper and healthier at home. Factoring in time, sometimes a restaurant meal might be cheaper, but if it’s cheaper, it’s probably not healthy.

  17. 17
    thefrugallery Says:

    In general, it is much cheaper to cook at home. I do get gift certificates through Restaurant.com which helps though. You can get a $25 certificate for $2 when they are on sale. Add in the 18% automatic tip, and another $10 to meet the $35 minimum, you’re looking at about $20 for a very nice meal.

  18. 18
    Bay Area Guy Says:

    Everyone here just talk about absolute price but no one factor in the taste of the food. Let’s get the obvious out of the way. We all went to college and we all know that instant noodle only cost 10 cents a bag. It is the cheapest food and there is no way a restaurant can beat that price. But how well it is made? For example, my friends and I used to go to this Chinese restaurant that made hand pull noodle. They went out of business and ever since we have been trying to find another one but so far we haven’t found anything that can compare. Maybe 80% there but not quite.

    There must be a price for how good something taste. You might be able to cook the same looking food but does it taste the same? If you are compromising on the taste than you are not comparing the same thing. It is like asking whether a Corolla is cheaper than a Lexus. Obviously, a Corolla is cheaper. But are they the same car? They are not.

    Now, obviously, some of you or maybe all of you are very good cook and your food taste equal or better than the restaurant but not all of us know how to cook that well.

    Anyway, the bottom line is you can’t compare the price of eating at home with eating at the restaurant in an apple to apple kind of way.

  19. 19
    John Says:

    I am a single person and I try to cook at home when I can for health and variety. My town of 10,000 people only has so many eateries, so if I ate out for all meals I’d get burned out rather quickly. Even lunches in town get old fairly fast.

    I deal with wasted food quite frequently at home. Certain things I just can’t get through before they go bad. My home meals often involve cans and frozen items or other methods of long-term preservation. I don’t eat frozen package dinners every night, but I use quite a bit of frozen chicken and the mixed frozen veggie packages. Then there are times that PBJ and a glass of milk is all the ambition I can muster. I don’t keep very much food in the house so that I have less spoilage, which reduces the variety of meals that I’m capable of.

    My meals are probably not far from 50/50 home and out.

  20. 20
    Maddy Han Says:

    I think that the less people you have, the easier it is to eat out. My husband and I sometimes only have two people (him and myself) and we will go grab sandwiches instead of going to the store and making them ourselves. If I added up all the costs … going to the grocery store is (slightly) cheaper, but well, it’s a hassle.

  21. 21
    dvz Says:

    I agree with Bay Area Guy. I almost feel like nothing else needs to be said. Still, a few things:

    1) I am perpetually curious about how people claim $100/week on groceries for a family of four. I rationally understand what that would entail, but the emotional part of me denies that it’s possible. An interesting internal experience!

    2) I track every literal penny we (two 30-somethings) spend, down to the $0.65 I put into the vending machine to cure a craving. And we spend too much on food. We’re trying to get it DOWN TO $600/mo for groceries/restaurants…from around $1000/mo. About half of that is groceries, eventhough we buy veggies at a discount produce stand. We don’t do anything posh (Outback is luxury eatin’ in our book), and it’s the frequency of dropping in at a restaurant on impulse, the happy hours, Groupons, and sushi that gets us. We don’t eat a lot of meat at home, but what we eat is humanely raised. We like cheese and avocados. I juice almost everyday, so that’s about $25/week of leafy greens, carrots, etc. We also just eat a lot of food in one sitting; I think that’s the main contributor to our grocery costs. The whole idea of a portion size of veggies being about a cup is absurd to us. I think if we ate out all the time we’d spend a comparable amount, because frankly, we’d probably eat less.

  22. 22
    SomeGuy Says:

    I agree with BayGuy and dvz. We are a household of two in an area that I would imagine is pretty average (lots of companies do product trials and betas here because we are, well, average). We spend $600-700/mo on groceries and $500-$600/mo on eating out. The eating out category is something we choose to splurge a little on, but the groceries is pretty solid. We are pretty active and I in paticular need a lot of calories, but it can’t be that much extra? SomeGal coupons like crazy, and we eat generally eat generic/store brand. We buy in bulk when on sale and freeze/store.

    It’s hard for me to imagine how a family of four is eating healthy on $100/week. Typically the cheapest way to meet the minimum caloric needs is unhealthy. Are you folks doing this living on dry pasta and potatoes?

  23. 23
    Brian Says:

    Those are some insane assumptions they are making. Putting all that aside however I’ll say this:

    My wife and I can’t usually stomach going out to eat any more unless it’s to some “gormet” fast food like Chipotle. When we want good food we always find we can do it better ourselves. If we want two amazing steaks it just doesn’t make sense to fork over $30 for a steak ($60 for two) when we can buy the best meat we can find for $10 a piece or less.

    Once you start leaning how to cook good food (rather than pasta with Ragu) the joys of making excellent meals grow… and at home it’s much cheaper to have the good bottle of wine too.

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