Financial Tip

Financial Tip
Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.

Dining Out to Save Money? It's Costing You More than You Think

Dining Out to Save Money? It's Costing You More than You Think

Another sign that the economy may be picking up is the reported increase in restaurant revenues, an indication that people are allowing more dining out into their once-strapped budgets. Recent surveys, however, point to another reason why people are choosing dining out over eating at home. Many have determined that it could be less expensive. Really? While it’s true that grocery prices have increased faster than restaurant prices, can one truly make the case that, over the long run, it’s cheaper to eat out, or is it just a rationalization for avoiding the kitchen? And, does this sudden increase in restaurant revenues have any correlation with the expanding belt sizes of American? Inquiring, or, perhaps, idle minds want to know.

Creating the Illusion of Value

With the exception of many of the fast food places, restaurant revenue plunged during the economic downturn forcing eating establishments to make changes in their menu that would entice the newly frugal out of their kitchens. Among the tactics we have seen over the last few years:

  • Growth of restaurant discounting: com, Groupon
  • More restaurant specials: $20 price-fixed meals for two with appetizer, buy-one-get-one-free, extended happy hours
  • Super-sized portions

Admittedly, smart consumers have found a way to take advantage of some of these tactics to spread their dining-out dollars further. Many simply request a take-out carton with their meal and take half or two-thirds of their supersized portion home for lunch and dinner the next day. Adding an extra person to a two-meal special cuts the cost for everyone. And, Restaurant.com certificates can cut the cost of a meal by half or more.

The Reality of Convenience versus Money

Cost comparisons of restaurant-prepared meals versus home-cooked versions seem to indicate that it’s a relative push. For instance, a 10-piece shrimp dinner with rice and vegetables at Red Lobster would cost about the same as a home-cooked version. But, here’s the rub. The cost comparison doesn’t include the cost of driving to the restaurant, the cost of waiting for a table, the cost of the tip, or the cost of drinks. While you can argue that there is a time cost in driving to the grocery store and preparing the meal, it is no more than what is spent on eating the same meal in a restaurant. It also doesn’t account for the fact that a trip to the grocery typically includes the purchase of items needed for several meals – so much for the “convenience” argument.

For fast food eaters, the cost difference is starker. That $6 order of chicken nuggets and fries could buy you a week’s worth of nuggets and fries from the frozen section of the grocery store. The same goes for a $7 burger and fries combo. And, by the time you drive to McDonalds, order your meal, and fill your drink, you could have already eaten your baked chicken nuggets at home. Although both versions are unhealthy enough to lead you to a slow death, at least the home version will last you longer.

Convenience versus Your Health

Which brings us to the ultimate cost of eating out – your health. To some people, it may be all about the money or the convenience; but, an increasing number of people are trying to watch their weight or eat healthier. While the chicken parmesan and broccoli at the Olive Garden may seem like a healthy choice, it’s actually laden with enough fat and calories for two days of hibernation. No matter how healthy the restaurant or the meal may seem, you have no control over the ingredients or the quality, which is the biggest advantage for home-cooked meals. If all else were equal – the time, the cost, the convenience – the health factor may be the biggest reason to get into the kitchen.

Dining out is always going to be a part of people’s regimen. Some people can’t avoid it simply because they literally don’t have the time to shop or cook. And, it should be something that we enjoy as a treat from time-to-time. But doing so with the idea that it is less expensive, or because the “convenience” offsets the extra cost, is delusional for people who think they are budget-minded or health conscious.


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The information contained herein may not represent the views and opinions of Zions Bank or its affiliates and is intended for informational purposes. It is presented for general informational purposes only and does not constitute tax, legal, investment or business advice.