I pulled this piece off my MSN homepage a few days ago. I found it quite interesting and wanted to share my thoughts. I've paraphrased the article to fit it in this post.
Is eating out cheaper than cooking?
By Christan Science Monitor
By the time he's driven to the farmers market, bought the organic veggies and spent an hour cooking a meal for himself and his wife, Mark Chernesky figures he's spent $30.
That's why recently, after fighting rush hour, the Atlanta multimedia coordinator dashed in to Figo, a pasta place, for hand-stuffed ravioli slathered with puttanesca sauce. "I'll get out of here for $17 plus tip," he said.
Crunch the numbers, and across America the refrain is the same: Eating out is the new eating in. Even with wages stagnant, time-strapped workers are abandoning the family kitchen in droves.
Restaurateurs are absorbing rising food and gas costs to keep menu prices low.
For the first time this year, American restaurants will bring in above a half-trillion dollars in total sales, according to the National Restaurant Association. The U.S. has about 925,000 restaurants, and at least 8,000 are added each year.
"The restaurant industry has become more essential to consumer daily lifestyles than at any point in history," said Hudson Riehle, the restaurant association's senior vice president of research.
The biggest reason for the shift in her lifestyle: grocery-store prices. Just the other day, she paid $8 for a package of chicken wings and was shocked that they cost so much.
Despite all the money Americans spend on eating out, restaurants' profit margins are below 5%, the National Restaurant Association says. A dearth of new cooks and waiters has meant the end of many eateries. But cutthroat competition among restaurants has helped them produce good food at low prices, experts say.
"Restaurants aren't winning on their sophistication of pricing -- they're winning on their ability to deliver value," said Mark Bergen, a pricing specialist at the Carlson School of Management at the University of Minnesota. "Simply put, restaurants are more efficient than you are."
Restaurant food costs went up more than 5% from the previous year in 2003 and 2004. Yet entrees stayed at much the same prices.
There are definatly two ways for me to examine this article. Once from the perspective of the restaurant, secondly as your average consumer. As an average consumer, with knowledge of food prices based on my job experiances, I am blown away by the markup on food, especially non-perishable food at the supermarket. I don’t like to shop at the supermarket because it irks me just how high the markups can go. Prices on meat and fish are doubled at least. Most non-perishable or dry goods are marked up on the order of 10X. At a restaurant on the other hand I understand the depth and scope of what goes into a meals pricing. I am happy to have a server, bartender, cooks, dishwashers, dishes, flatware, glasses, a bevy of condiments and beverages waiting at my beacon.
Why doesn’t everyone just go out to eat? I think there will be a considerable shift in the near future towards dining out. The prices of food aren’t going to reverse and go down. Food isn’t going to become less perishable. People aren’t going to find more free time, and energy to cook for themselves. Over the past hundred years there are a lot of house chores that have been outsourced. For instance, auto repair, you could go to the auto parts store, buy the parts, educate yourself in car repair, and finally fix your car yourself. You don’t though, you take it to someone with parts, and tools, and education that you lack. In the future we will think the same way about food. You might have the opportunity to visit a grocery store, buy perishable food, learn how to cook, find the time and hopefully an equipped kitchen to work in where you can make dinner. Or you will go to a restaurant just as simply put as taking your car to a professional shop.
The less and less people cook for themselves, the better we off we are in the restaurant. I am not talking about cooking as in entertaining a dinner party, nor is the restaurant I refer to fine dining. Rather cooking and eating revolve around acquiring calories. How will the restaurant keep prices manageable? I think that restaurants hold an inventory of both food and equipment that is far superior to that of any home kitchen. As this division continues to widen it will become more and more economical for people to dine out. The more people that dine out will directly affect the restaurants bottom line, and as we say in the business, sales cure all ills.