Should you Dine in or Dine out? The Price of Convenience

Restaurants are a significant part of the economy.  Americans have a love affair with restaurants persisting even through our recent economic slump.   In 2010 there were 11 million food preparation and serving employees, paid a median wage of $9.02/hr.   In 2009, we spent an average of $2,619 per household for “food away from home” (largely fast food and casual dining) compared with $3,753 for “food at home.”  Why would we spend $316 billion a year for a restaurant experience?  How much more does it cost than home meals?

 

To answer the latter question, we used SEC reports for 31 fast food or casual dining brands, representing 77,000 restaurants.  Their wholesale food costs are 30.8% of a consumer’s restaurant check (31.01% for fast food, 28.6% for casual).  We used a large grocery chain’s SEC report to estimate the wholesale /retail price (71.3% of retail) ratio.   So, consumers could buy the food in a fast food meal for 44.1% of the check.  In a casual dining restaurant they’d pay the check, plus 5.52% sales tax and likely a 15% tip on everything, i.e. 121.3% of the check.  In a fast food restaurant, tipping is not expected.  Overall, casual dining consumers pay 183% more and fast food consumers pay 127% more than they’d pay to eat at home (excludes water, energy, and wear and tear).

 

As % of

restaurant check

 

Home cost of fast food menu

Cost to fast food restaurant

Home cost of casual dining

Cost to casual dining restaurant

Wholesale food

 

0

31.0%

0

28.61

Retail food

 

44.1%

 

40.6%

0

Restaurant check

 

0

100.0%

0

100%

Sales Tax

 

5.52%

5.52%

5.52%

5.52%

Tip

 

0

0

0

15%

Cost to Consumer

 

46.49%

105.5%

42.89%

121.3%

     Premium paid

   

127%

 

183%

 

Beyond convenience there are factors that favor a choice to dine away from home, including hard to replicate recipes, breadth of menu choices, no mess to clear, and sometimes avoiding loneliness.  On the other hand, dining at home has strong advantages too; portion and noise control, no need for transportation, you know precisely what’s in the meal, and working together on meal preparation can be a joyful project.

 

No food-police sermons, no imperious criticism of consumer spending… just the facts. 

 

Alan Daley blogs for the American Consumer Institute at www.theamericanconsumer.org.  In full disclosure – he is an enthusiastic fan of some restaurant-chain fare. 

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