Cooking at home vs. eating out

 

Scallop sashimi, aji amarillo, lychee, pink peppercorn at Smallwares

Scallop sashimi, aji amarillo, lychee, pink peppercorn at Smallwares in Portland, OR

Intro:

Here’s the thing.  I used to eat out at restaurants so much that I decided to start a food blog in 2010 to keep track of all the fabulous meals I was having around NYC.  I didn’t want to forget them; I wanted to savor the memories.  I will say, looking back at the blog for the first time in a few years, I’m still really glad I documented it.  I ate some amazing food in NYC (and Portland), and I probably would have forgotten some of those experiences otherwise.

Anyway, I don’t dine out as much these days, mostly because I took a hard look at my values and decided that the excessive spending on foodie restaurants didn’t really align that well with my life priorities.  Luckily I like cooking too.

We cook a lot more now and go to restaurants just occasionally, usually as a treat or to socialize, which are happiness-enhancing behaviors (delayed gratification) and also fit better with our priorities.  Life is good under this new paradigm, and if you have similar goals/values/priorities and a weakness for restaurant food (and drink), I would definitely encourage a test run.

Apparently, most people eat a little over four commercially prepared meals per week, or about 18 per month.  These meals cost about $13.00 on average versus about $4.00 when you cook for yourself.  But those are just face-value costs and don’t include things like driving, time/labor, and the intangible suckiness of having to do your own dishes.

So that is what this post is about… does eating out two times less per week, about a 50% reduction for most people, save you money.  And if so, how much?

The numbers:

How much will the small sacrifice of cooking for yourself two more times per week save you?  Assuming you’re like the rest of America in restaurant spending habits, my estimate is somewhere in the ballpark of $8,600 per decade.  Here are the details:

  • 10 Year NPV: $8,632
  • 10 Year ROI: 88%
  • 10 Year Payback: 0.6 years
roi - eat out less

click for link to live spreadsheet

chart - eat out less

That is a pretty snazzy $86-hundred for simply 86-ing two restaurant meals per week, especially just for one person!  And being even more ambitious by cutting 4 meals out every week is worth over $17,000 per person every 10 years.

Some notes and observations…

I’m including time and labor costs in these numbers.  If you exclude them by looking at the hard value with growth number, you’ll notice that the top-line value of two less meals out per week exceeds $12,200 over ten years.  It isn’t a big surprise, at least to me, that cooking requires a bit more time and is slightly less fun (mostly just the dishes part).

Over 10 years, the average meal out costs about $15 with time and labor costs included versus $13 without.  Compare that to $9 and $4 for home-cooked food.   This means that cooking for yourself saves about $6 per person every meal when you count time and labor costs.  Excluding time and labor costs, the savings is even greater at $11 per person per meal.

friday night pizza special

friday night homemade pizza special

On the intangible cost front, I’m assuming that driving costs essentially cancel each other out for both scenarios.  I’m also assuming that your time is worth about $10 per hour when cooking and $7 per hour when chillaxing at a restaurant with your friends/family/smartphone/book.

For the commercially prepared meals, I’m guessing average wait times of about 10 minutes per meal versus 30 minutes of prepping, cooking, cleaning, and packing-up when cooking for yourself.  30 minutes might seem low, but there are a lot of meals where you don’t have to cook anything at all because you made huge portions the night before (more on this later).

Anyway, that is the basic framework, and it is all adjustable if you want to download and tinker with the ROI spreadsheet yourself.

General musings on cooking more often:

There are a few ways to leverage this example even further.  I’m using a $4.00 per person per meal assumption when you cook for yourself, but Mark Bittman from the New York Times has a great infographic showing how you can have nutritious meals at even lower costs. And if you really want to amp things up, aka, keep your food costs down, Leanne Brown has a free cookbook that shows how you can cook healthy meals on roughly $4.00 per day or $1.33 per meal!  This would be huge additional savings if you wanted to give it a try.

good and cheap cookbook

Click the image for a link to Leanne Brown’s free cookbook that shows how you can eat healthy for $1.33 per meal, roughly the same amount as someone living on food stamps

On top of that, there are also economies of scale to be had.  Green Stream Money has a nice article about how to save time and money by cooking a bunch of meals all at once for the whole month.  I’ve done this before with my lady friend, cooking and freezing vast quantities of hearty winter soups to eat throughout the season.  This kind of cooking really cuts down on the time and labor costs in my opinion.

And then there are services like emeals, which will plan weekly meals and shopping lists for you, customized based on family size and diet preferences (paleo, natural, vegetarian, low-carb, gluten-free, etc.).  I like this idea because it takes a lot of the thinking  and meticulous planning / list-making out of the equation.

When our family gets larger, I think we’ll probably move in this direction, unless, of course, we’re able to pretire earlier than planned.  My one beef with this service right now is that they don’t offer a primarily plants-based diet that also includes just a little meat, say 3 or 4 times per week, the flexitarian approach.

Flexitarianism is pretty close to what one of my favorite food writers, Michael Pollan, advocates:

Eat (real) food.

Not too much.

Mostly plants.

Michael Pollan has a bunch of great books about food.  Recently he wrote an interesting long-read about the microbiome, where he recommends eating more fermented foods as well (sauerkraut or kimchi for example).

Along the lines of following a more plants-based diet, I’ve really found this vegetarian cookbook, by, wait for it, Marta Stewart Living, to be super helpful (I only take my cooking advice from ex-cons 😉 ).  First off, the pictures are beautiful and get you excited for cooking.  Secondly, the recipes aren’t that complicated and the ingredients are easy to find at most grocery stores, which brings me to my final point in support of cooking for yourself more often: controlling ingredients and knowing that you’re eating wholesome food.

Even if you’re eating something relatively unhealthy like pizza, if you made it at home, it just feels healthier.  I think a large part of that is knowing what ingredients went into the food, knowing that there weren’t any really unhealthy shortcuts used, and simply being more involved and taking more pride in your own food.

arepa

this homemade bbq pork, jalepeno cole slaw, and tillamook cheddar cheese arepa is healthy right?

On the flip side, of course there are some really good deals out there on restaurant food.  I sort of feel like a hypocrite talking about healthy diets and saving money by cooking for yourself more often when my go-to dinner in NYC used to be a $2.00 rajas tamale (chicken, tomato, and jalapeño) from the neighborhood Mexican diner, usually accompanied by a single Leffe from the bodega across the street.  But those were my bachelor days, and I more than made up for the cheap workweek dinners with expensive meals and nights on the town.

tamale

authentic rajas tamale and summer flannel time in oaxaca (honeymoon style)

In that sense, if you’re anything like we used to be and really enjoy the fine dining experience, the value of cooking for yourself is probably much higher.

Nowadays we have a rule that when we do eat out, we only eat at places that are two dollar signs ($$) or less on Yelp.  This keeps things relatively inexpensive and suits our newfound (and suspiciously convenient, my wife might say) preference for authentic ethnic food over fine dining.

Bottom line:

Cooking for yourself even a few extra times a week can save a ton of money, especially if you’re replacing some of your fancier restaurant meals.

And considering that food is the second largest expense for Americans, and that Americans are going out to eat more and more often, it stands to reason that there is probably a lot of “fat” to trim in most people’s food budgets.

home-cooked garden delight

home-cooked garden delight… i told you we eat healthy….. sometimes 🙂

Assumptions:
  1. Average meal out costs $13.00 per person (simple dollar)
  2. Average meal home-cooked meal costs $4.00 per person (new york times / self)
  3. 10 minutes of waiting while eating out (self)
  4. 30 minutes of work while cooking in (self)
  5. Cooking time valued at $10 per hour (self)
  6. Waiting out time valued at $7 per hour (self)
  7. Actual hard dollar savings are invested each year and earn 4% real rate of return (constant across all ROI analyses)
potato soup

#tbt to semi-fancy but unhealthy bachelor meals like potatoes, beer, and potatoes… mmmmm

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Comments

  1. Dwayne Hoover says:

    Wow, dude, very cool – that’s even higher than I expected.

    So cutting out 4 professionally-prepared meals saves $17,000 per person, every 10 years. If we assume than that, by the rule of 72, my money will roughly double every 10 years, does that mean 20 years of a person not eating out saves $51,000? And that if a husband and a wife did that, it would be $102,000 saved over 20 years? If so, that is crazy. With inflation, I’m not sure what the NPV of 102K in 20 years is… but I’m thinking it’s still a pretty big number.

    My wife and I almost never eat out, mostly because we’ve got little ones and it’s no fun anyway.

  2. The US is definitely cheaper than Canada. I can’t find a restaurant that will feed me an entrée for $13, let alone a full meal but I do understand that that’s an average for breakfast, lunch and dinner.

    We eat out 2X per month and each meal bill comes out at about $40 CDN, so I guess we’re on the right side of the equation.

    As for prep time, I think it comes down with experience. Here are a few examples:
    – Seared ribeye & asparagus = 10 minutes (yes, I did time it, including seasoning)
    – Crockpot chicken and mixed greens salad = 10 minutes again (not including cooking time, but the crockpot did all the work, I swear)

    Each of these two meals were about $5/person.

    It definitely pays to cook at home and potluck get togethers are the bomb: you don’t have a waiter breathing down your neck to free up the table and everyone you invited tends to bring their signature dish.

    • Nice… both of those meals sound delicious! I need to use my slow cooker more… such an easy solution!

      Some of my hometown friends have a dinner club like you talk about below, but I’ve never been part of one myself. Sounds like a great idea to leverage two great things in my book… cheap home-cooked food and casual social get-togethers.

  3. Why are you assuming 4% real rate of return? Long-term, is it not 7%?

    • Hi Joe, I like to be a little conservative with my ROR estimates because the timeline of 10 years can have highly volatile returns, sometimes even negative if all equity, so prefer to keep it a little lower. Also, I attempt to factor in inflation which brings nominal returns down a bit, and finally, it reflects a somewhat less optimistic view of returns in the future. I like knowing that, for the long term, if anything, hopefully it is an underestimation of savings.

  4. Add the value of a drink or two (for two people?) and this calc goes through the roof. A vodka martini at home will cost you $1.00 and one out will be $9.00 (Use your own numbers if you want, the point is still the same). Thinking about the difference if you drink a bottle of wine and the calc is astromonical.

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