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.
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The article is correct for the San Francisco Bay area where PG&E electricity rates are outlandish. That equates to higher food prices at the store, higher costs to keep the food fresh or frozen, higher costs to cook the food at home and do clean up. Electricity residential rates are 36 cens to 48 cents per kilowatt hour while comercial rates are at 16 cents per kwhr and Natural Gas is also higher for residential customers.
My Dad and his wife dine our every night and eat Steak and srimp at outback or Elephant Bar for $25.00. The restaurants split the meal for them and wave the Corking charge on their $3.00 bottle of white Zinphandel. They have never used anything but the microwave or toaster at home and have a $30.00 electric bill.. At 97 years old, he does not have to shop for groceries, cook or clean up. His dining out one steak and shrimp costs $750.00 per month and the Splitting of Breakfast at Dennies twice a week costs him $80.00. My grocery bill is $550 per month and the Ecectricity and gas I use is $230.00 per month. My $750.00 doing all the work to my dads getting served is only $2.00 per day per month for my dad.. I also eat out 3 times a week and bar-B-Q 6 times or more more per month. Most posters on this site do not count the cost of the energy or live in low cost energy states. For Northern California, Eating out could be just what the elderly need to do.
What about the Electricity you use to Refigerate or freeze your food and beverages before you cook, the energy you use while you cook and the energy you use doing cleanup like dishwasher, hot water, kitchen lighting. In California, where PG&E charges up to 48 cents per Kilowatt hour, you could expend 5 to 10 Kilowatt hours per meal and another 5 to 12 kilowatt hours on refigeration and clean up. If each meal energy cost was 10 kilowatt hours and you are in the top 3 tiers, your meal could cost upwards of $5.00 each in energy on average. Switching to a convection oven using 1,200 watts rather than the built in oven that uses 4800 watts could be a large savings. Using the small burner on the stoive at 1800 watts rather than the large burner thatuses 2400 watts for small pans could add up over a month. We eat out and bring home leftovers that can be re-heated in the microwave or convection oven rather than cook at home. When my wife's mother, who likes to cook came to visit, our electric bill went up $100.00 that month.
Add to the electric savings the value of" buy - one - get - one" (BOGO) coupons and you can realy eat out cheaper than cooking at home. Find restaurants that wave the corking fees for wine, like Outback, and bring in your own wine and realy have a feast. No clean up or dishes to wash. What you save in enrgy alone covers the tip and tax. Enjoy.
One item missing in the 'cook - at - home' calculations is the cost of utilities for cooking (gas/electricity) and clean-up (hot water/soap/dishwasher)
also eating out usually provides enough food to take leftovers home for either lunch or small dinner.
Toldin-I cannot afford to tip a waitress or waiter, but I am not a cheapskate. You need to take into consideration those people who are low income and barely eat out because of the cost. I want to treat my son sometimes by eating out and it pays off with the bonding.
I wish I could eat out more, but food stamps do not cover restaurants. It would be cheaper for them and for us if they did.
If you’re going to include the cost of gas and the tip, you have to consider the $ spent on the electricity and other ingredients used to prepare those boxes of rice or the potatoes at home. And not to mention hot water and soap you’re going to use at home washing the dishes.
It's interesting that most people who commented didn't bother to take into account that the author admits that the "research: done was not executed very well. It seems that he was just trying to highlight that food costs are going up, and consumers might want a different perspective on cooking in vs. eating out. I know that before my husband and I had childern, it was cheaper for us to eat out, especially since we usually eat appetizers for meals or have a bowl of soup and a side. If we made meals at home, we ended up throwing out a lot of it. There is only so much room in a freezer =) As our budget has gotten smaller with two children, it seems that we are spending more for the same amount of food when we go to the grocery store, and it's still cost effective for us to eat out for dinner and eat breakfast and lunch at home. This is with price-matching at the grocery store and using coupons vs. ordering carry-out or dining in.
The math is NOT wrong here. It often does cost much less to eat out than eat in. The key point here is comparable food items. You can't go to a fancy steak house and order a filet mignon and compare that to a cheap flank steak from the grocery store. It's not apples to apples. You also can't go out and spend money on cocktails and expensive appetizers and deserts and expect it to be cheaper. It's a well known fact that restaurants make their money with appetizers and deserts. These items are way overpriced, and most likely if you're home you're not going to make those items anyway. If you are smart about what you are ordering at restaurants, you can and will save money over eating at home.
Two other points to keep in mind. First, you can order takeout at these places. That eliminates the time waiting for a table and the cost of a tip. Second, you have to consider waste. When you buy bulk at home, very often that food goes to waste. For example, as a single person, I don't buy bread or milk for home because these always go bad before I can eat/drink them. It's cheaper for me to go to a deli and order a sandwich when I'm hungry than to buy a loaf of bread that I'm only going to use half of.
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