Updated on 11.10.11

Saving Pennies or Dollars? Restaurant Discounts

Trent Hamm

saving pennies or dollarsSaving Pennies or Dollars is a new semi-regular series on The Simple Dollar, inspired by a great discussion on The Simple Dollar’s Facebook page concerning frugal tactics that might not really save that much money. I’m going to take some of the scenarios described by the readers there and try to break down the numbers to see if the savings is really worth the time invested.

Charlie writes in: I can pretty consistently get 50% off discounts on meals at neighborhood restaurants. As a single guy, I can’t believe this isn’t a big saver over making the same meal at home.

The direct response I’d make to this question is “What neighborhood restaurants are you getting this kind of discount at?” Without that information, it’s really hard to quantify how much you’re saving at home or at a restaurant.

So, in order to look more carefully at this, I went and looked at the menu of one of the most popular chain restaurants around, Applebees. You can look at their menu here.

If you take the prices of many of these meals, eliminate half of the value, and compare them to the cost of making them at home, the prices are pretty similar. I did some back-of-the-envelope calculations comparing various sandwiches and entrees to my best estimate of what you’d have to invest to make a similar meal at home and the results were similar.

However, the restaurant experience has some additional costs. If you drink anything besides water, you’re going to be paying quite a bit more for that than it would cost you at home. You have the cost of the tip. You have the cost of driving to and from the restaurant (and a mile in your car costs you about $0.50 when you figure in all of the factors). Those are going to be on top of your basic meal cost – and they tip the scale toward eating at home.

The biggest factor that people always mention is time when it comes to eating out. It’s probably quicker to eat out if you’re going through a drive-thru, but if you’re dining at a restaurant, you have to include the time spent getting there, going into the restaurant and to your seat, ordering, waiting for your food, waiting for the waitstaff to handle your ticket after you’re done eating, going out to your vehicle, and driving home. That time really adds up.

Again, it’s very difficult to precisely quantify all of these things because they vary so much from specific situation to specific situation, but even with the 50% discount, I would generally say that the time invested in eating out and eating at home is roughly equal and the cost of dining out is more.

So, why eat out? Simply put, it’s far more relaxing. If I go out to eat by myself (which I do every once in a great while if I’m traveling or have a packed day schedule), I can just sit there and read a book (which is what I usually do) instead of preparing food. If I go out to eat with others, we can just sit there and enjoy each other’s company.

Most of the time, I’d rather prepare food at home as I enjoy the process and it is less expensive. We often turn it into a family activity, where the children are setting the table and Sarah and I are working together to get a meal on the table. Even for meals when I’m at home alone, I’d still rather prepare myself something simple, like scrambled eggs. Not only that, I have control over the ingredients. I get to decide what’s in the food, something I don’t have control over at a restaurant.

The reason to eat at a restaurant is the experience. You get to sit there and enjoy a solitary activity or the company of others while your food is prepared. That comes at a cost, even with a 50% off coupon for the meal. Sometimes, there’s also the factor of eating an exceptional meal, but when you do that, you’re often paying an additional premium.

If you have a chance to get a restaurant discount, great. However, even with a steady supply of coupons, the cost of always eating out doesn’t add up.

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  1. Johanna says:

    “If you take the prices of many of these meals, eliminate half of the value, and compare them to the cost of making them at home, the prices are pretty similar.”

    How do you figure? $4-5 seems like a lot for a homecooked meal for one person, unless you’re using premium ingredients (which I imagine Applebee’s doesn’t). It would have been interesting to see your cost breakdown here.

    And keep in mind that the price listed on the menu is not what you end up paying. There’s sales tax on restaurant meals (and not on groceries, in most places), plus the tip. Even if you’re getting a discount on the meal, you should still be tipping based on the undiscounted price.

  2. valleycat1 says:

    Our local tax is hovering around 9%, so with the tip you’re paying 25-30% more at a restaurant vs. fast food for the same meal price.

    And, Trent, you didn’t deduct half of the value of the meal, you deducted half of the price of the meal.

    For a single guy who doesn’t keep a lot of staple foods around, or for people just beginning to cook at home, initial expenses can run high because you have to buy everything.

    This week at a local grocery, a 4-pack of hamburger patties cost $3.39 (less expensive if you buy the meat not already in patties), plus 8 buns at around $2.50. So for 8 burgers (I’m assuming you have most of the other ingredients on hand already, which can be used for other meals too), you spend approx. $10 for 4-8 entrees depending on how many burgers you want to eat.

  3. Tracy says:

    I think that the time it takes to get to the restaurant is probably negligible in this case – Charlie calls it ‘neighborhood restaurants’ which doesn’t sound like somebody who has to ‘go into town’ to eat.

    The expensive part of cooking at home tends to be the start-up costs. If you look at a meal and then go to price the ingredients to make that meal and (like valleycat1 mentions) you don’t take into account the fact that you can purchase enough for *several* meals for about the same price, it seems more expensive. Plus, if you’re having to buy start-up spices, it can add up really fast.

    If Charlie isn’t going to eat leftovers, isn’t going to prepare multiple meals using the same ingredients in a short period of time or freeze what can be frozen – if he’s buying, eating, and throwing away what’s left, then yeah, it probably will come out cheaper than eating at a restaurant. But if he does even just some of those things, eating at home should come out less expensive in the long run.

  4. Baley says:

    Also, Valleycat1’s estimate doesn’t include fries or another side to go with it, which would be included in a restaurant meal, as well as lettuce and tomato (which he isn’t likely to have on-hand already). It really does seem to add up sometimes. It’s hard even for two of us to make yummy, healthy, fresh meals (other than spaghetti) in a smart enough way to save money. Yes, grocery shopping will usually come out ahead, especially at restaurants with tip, but for a single guy with 1/2 priced meals, it’s probably pretty tough to beat (how quickly can he consume a head of lettuce and a tomato, for instance, in order to use the whole thing to reduce the price per serving?).

  5. Vanessa says:

    No matter how I try, I can never make a sandwich as good as one I get out of a restaurant. I wonder what their secret is.

  6. Steven says:

    The secret is butter! :)

  7. Riki says:

    I was just going to say that!

    The secret is lots and lots of butter.

  8. Johanna says:

    If it’s really important to you to have exactly the same meal that you’re getting in a restaurant, then sure, there can be challenges to doing that as a single person (although some of them can be overcome – for example, you can buy smaller tomatoes and use a whole one per sandwich). The key is allowing yourself some flexibility, and coming up with creative uses for the things you have on hand before they go bad. Instead of topping your sandwich with lettuce and tomato, maybe you could use spinach, onions, or peppers (all of which lend themselves to other recipes too, so you can use them up faster). Or just use nonperishables like ketchup, mustard, and pickles, and have your veggies in a big side salad. Or instead of having a sandwich, make a big pot of soup or stew, where you have more flexibility in the exact amounts of ingredients you use.

  9. Steven says:

    A restaurant aims for 30-33% food cost when pricing the menu. So, this means that on average, the cost of the food is ~1/3 the price.

    Of course you will have variations. They make a killing on sides, soups and pastas, and typically a little less profit on steaks, ribs, and sometimes seafood (depending on how stingy they are).

    Liquor is ~10-15% food cost, therefore typically have an upcharge of 10X.

  10. A Sumner says:

    When I saw the title, I was hoping this was going to also address employees of restaurants. If you’re already there (because you have to be), and you’re getting a 50% discount, is the standard advice to brown bag your lunch still the better option financially? And if it’s still cheaper to bring in something: What if the length of your shift is just short of getting a lunch break, so if you’re hungry you only have a ten minute break to eat? Heating up leftovers uses up some of that ten minutes. Its hard to want a cold sandwich when you’ve spend the last few hours smelling and looking at food designed to make you feel hungry.

  11. Vanessa says:

    Butter, huh? Where is it? On the bread? My sandwiches never taste particularly “buttery” so where are they hiding it?

    I would’ve guessed salt.

  12. Des says:

    Butter and salt, and maybe MSG as well.

  13. elyn says:

    We tend to go to restaurants that make food I cannot make easily at home: mostly cuisine such as Thai, Indian, fancy Southwest and Mexican, Chinese, Ethiopian, etc. Buying a bunch of specialty items in order to try to cook this sort of food adds up, and doesn’t guarantee a good meal. We’ve tried repeatedly, but can never make a good green curry, or Aloo Gobi like our favorite restaurants’ do. And we have wasted many ingredients in the process of trying.

    That said, we don’t eat out that often, especially now because we have a toddler and an infant. For us, it is NOT about “THE experience” Trent describes, but definitely about the food. Getting our toddler to be well-behaved in a nice restaurant is a LOT of work (not always a great experience), but worth it for the good eating and the exposure she is getting to world cuisine.

  14. Ash says:

    There are other advantages to eaing out, one being not having to clean up afterwards(+cost of running the dishwasher)or in the case of a take away not having to wash pots and pans, clean the cooker etc. Having a meal out on the way home from work/class saves time too. I sometimes have dessert/coffee at home afterward to save on costs and invite friends/family dining with me to do the same.

  15. charles says:

    For me, I don’t like cooking that much and cleaning up afterwards is even worse. For this reason, I would pay the extra money and enjoy the same meal at a restaurant than making it at home.

  16. Emma says:

    I’ve had great luck recently making “fancy” sandwiches at home, and for me, it’s neither butter, not salt, nor MSG that does the trick (although butter does improve everything…). First, I buy nice ingredients (a fresh baguette, meat that isn’t made from ground chicken feet, cheese that is more milk than chemicals, etc). Use real food, fresh, with no condiments – if you’re using food with good tastes, you shouldn’t have to smother it with sauces! Then, it’s all in the presentation – make up your sandwich and then serve it on a nice plate, with some chips and a pickle.

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