Why It’s Cheaper to Dine Out Than Eat In
Life + Money

Why It’s Cheaper to Dine Out Than Eat In

iStockphoto/The Fiscal Times

 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 their kitchen, according to a report released this week by Bank of America Merrill Lynch. Since mid-2009, consumers have been spending a bigger and bigger portion of their paychecks – now almost 4.5 percent – on dining out. Spending on grocery items, on the other hand, still takes a bigger slice of those paychecks but has remained basically flat over the same period.

Eating out rather than dining in may seem like a perplexing choice for people still trying to recover from the Great Recession, but a closer look at the financial and time pressures families are experiencing helps explain the trend. Shopping and preparing meals takes time – time that 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, 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 percent a year, about 2.5 times as fast as the cost of restaurant meals, according to the report. It is becoming cheaper (on a relative basis, the report notes) for consumers to eat 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 these price hikes directly onto consumers.  Restaurants too, have to deal with increasing commodity prices, but are better able to offset them by buying in bulk and cutting back in other areas – like wages. With youth unemployment hovering at 24 percent, 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 eating out versus dining 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 home. Admittedly, our methodology was highly unscientific. After all, we’re based in New York City and didn’t go hunting for the best deals we could find on groceries. We also 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 comes with a time trade-off that many families can’t afford to make these days.

The comparisons that follow at least offer some food for thought.

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