1/19/2012 6:45 PM ET|
Is eating out cheaper than cooking?
As grocery prices go up and restaurants struggle to hold the line on menu prices, dinner from the kitchen isn't necessarily the most economical.
All across the country tonight, Americans will be asking one important question: "What's for dinner?"
For an increasing number, the answer will be on a restaurant menu rather than in their kitchen, according to a report released late last year by Bank of America Merrill Lynch. Since mid-2009, consumers have been spending more and more of their paychecks -- now almost 4.5% -- on dining out. While spending on grocery items takes a bigger slice of those paychecks, it has remained basically flat over the same period.
The choice of whether to eat in or dine out may seem obvious, but for people still trying to recover from the Great Recession, it's often not that simple. A closer look at the financial and time pressures families are experiencing helps explain why.
Shopping and preparing meals takes time -- something people simply don't have these days. And if Americans do find a spare hour here or there, they're likely to dedicate it to work so they can earn a little extra income, writes Neil Dutta, an economist at Bank of America and co-author of the report.
On top of that, supermarket food prices are increasing at a staggering 6% a year, about 2.5 times as fast as the cost of restaurant meals, according to the report. It is becoming cheaper for consumers to dine out. "It's all about substitution, as prices at grocery stores rise, consumers will respond by making choices," says Dutta.
One of the biggest drivers behind the increased food costs is the rising price of commodities like wheat and corn. Grocery stores tend to pass on these price hikes directly to consumers. Restaurants too, have to deal with increasing commodity prices, but they are better able to offset them by buying in bulk and cutting back in other areas -- like wages. With youth unemployment hovering aroiund 24%, it's an unfortunate truth that restaurants are able to find younger workers who will do more for less.
To get a read on the relative value of dining out versus eating in, The Fiscal Times took a (virtual) trip to some large restaurant chains and compared the prices of meals there to the costs of preparing the same meals at home. Admittedly, our methodology was highly unscientific. After all, we're based in New York City. Further, we didn't go hunting for the best grocery deals and didn't factor in whether one meal or another would be healthier or friendlier to the environment. But that's part of the point -- eating right and finding the extra savings that could be had by comparison shopping come with money and time commitments many families can't afford.
The comparisons that follow at least offer some food for thought.
Meal: 10oz rib-eye dinner (includes soup, salad and asparagus)
Total price: $17.99
Grocery store: rib-eye, $9.55; soup, $2.99; bag salad, $3.99; asparagus, $3.99 a bunch
Grocery store items were calculated using prices at FreshDirect. Rib-eye prices were calculated using a 10-ounce cut of meat.
Meal: seafood alfredo (unlimited salad and breadsticks).
Total price: $15.50
Grocery store: fresh shrimp, $5.33; scallops, $3.99; pasta, $1.99; bag salad, $3.99; breadsticks, $3.99
Winner: Olive Garden
Grocery-store items were calculated using prices at FreshDirect. Seafood estimates based on one-third pound of shrimp and one-third pound of scallops
Meal: 10 piece garlic-grilled jumbo shrimp (served with broccoli, mashed potatoes, salad, rice pilaf)
Total price: $18.99
Grocery store: jumbo shrimp (10 pcs), $7.99; boxed wild rice, $2.79; mashed potatoes, $2.99; broccoli, $2.99 each
Total price: $17.76
Winner: Eat at home (barely)
Grocery-store items were calculated using prices at FreshDirect. Seafood estimates based on one-half pound of shrimp. Mashed potatoes sold as finished dish at FreshDirect.
Meal: beef and broccoli (includes white rice)
Total price: $12.75
Grocery store: flank steak, $9.79; broccoli, $2.99 each; rice, $2.79
Winner: P.F. Chang's
Grocery store items were calculated using prices at Fresh Direct. Beef price based on a 7-ounce portion of flank steak.
The Cheesecake Factory
Meal: Lemon-roasted herb chicken (half) served with mashed potatoes and carrots)
Total price: $16.95
Grocery store: fresh organic chicken half, $9.18; potatoes, $2.99; carrots, $2.99
Total price: $15.16
Winner: Cooking at home
Grocery-store items were calculated using prices at FreshDirect. Chicken price calculated using half of a full chicken price.
More from The Fiscal Times:
VIDEO ON MSN MONEY
I will never read another msn.com article and I regret reading this one and giving them my traffic. I'd like the last 10 minutes of my life back please.
Wow! Did the restaurants lobby for this article? The ingredients to make these meals bought at the grocery and made at home could feed 2-4. Soup 3.99, bag of salad 3.99, potatoes 2.99? You can buy a ten-pound bag for 1.99. C'mon Man!
My grocery bill for the week costs less then it would cost to feed a family of four ONCE, one night out, at any restaurant. Unless you are pushing Mcdonalds in which case you should feel ashamed for pushing garbage and poison on people and promoting disease and obesity in children. I deeply regret clicking on this link and giving you trash my traffic.
B of A is noted for sneaking in exorbitant fees to boost profits on the backs of consumers in an attempt to circumvent the banking and credit card regulations recently enacted.
Information about saving money from a banker is like information from a politician on how to run your life. Have you checked the interest rates on saving accounts offered by BofA? Ridiculous!
One would get a better return playing the lotto.
Two ninety nine for a soup from the grocery?? Remember the comparison should be for a bowl of soup (serving), not the whole can.
Methinks your numbers are, ummm, cooked...
What this looks like to me is subliminal propaganda to get people to eat out more. What about the health benefit of eating at home, and being able to better control how much you eat and the health contents of your meals?
Oops... looks like someone forgot to figure in the fuel to get to the restaurant and the TIP. Oh, and what to drink at the restaurant? Water? Get real. It is, and always has been cheaper AND healthier to eat a homecooked meal. Nice job showing a fit, healthy looking family spread out at a greasy spoon joint. Is that the norm in America?
I asked my wife how much we spent the last two nights to feed three of us at home. Fresh Alaska Cod, veggies and rice for one and Shrimp, veggies and rice the second night. Total cost each night was $4.99 for the main dish and $1.50 for the rest. Total cost was $6.49 divided by 3 makes $2.16 each. PLUS, there were left overs. We can have lunch today for free by just warming up what we have in the fridge. That basically cuts the $2.16 in half for $1.08 per person per meal. Try doing that at the restaurant.
I agree this article is absurd! Part of the reason is it is written by someone who must not cook. I don't spend the type of money that Nick suggest at the grocery store. And, why don't people have time to cook? Most of them are out of work so I would guess that many do have the time. And the other thing about cooking cheaper at home is that I know what goes into my meals.
Always eating out leaves a lot to the imagination to what is actually being done to the food.
Well I have a family of 4 and following what you just posted I would be out of money the first week, and Still have 3 weeks to plan for since I have a fixed income.
What I would spend on 1 meal out by your thoughts I can feed my family 3 meals a day for a week. You really need to pull your reading, and RETHINK it. To get a proper answer. This is by far the WORST attempt at comparing where to eat at. HOME is ALWAYS the winner, unless you want to compare the fast food meals 3.00 a person. THEN you can feed a family of 4 under 20 a night. But the problems you would give them forever, is not even close to worth it.
Eating out = health problems.
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