The Costs of Keeping Fed

Dining out, cooking at home, meal subscription plans… what’s the best deal?

mealFood prices are on the rise, so our clients and everyone else trying to live on a budget are having to adjust their meal preparation habits to account for higher costs. There are many ways to keep yourself fed, whether that’s dining out, preparing meals at home, or using meal kit delivery services. What’s the best way to keep food costs under budget?

Dining out

Typically, dining out is the most expensive way to eat. Over the past few decades, our standard model shows that dining out is five times more expensive than preparing your own meals.

But recently, that model has been challenged, and some studies and media outlets argue that dining out can be less expensive than preparing meals at home, and maybe even more affordable in the coming year.

Why do so many experts argue that dining out is the better option financially? It has to do with ongoing changes in food prices. If you look at the Consumer Price Index, for the 12-month period ending in July 2022, at-home food costs rose 13.1%. In addition, every month for the past year, food prices have risen by an average of over 1%. What about dining out?

That same Consumer Price Index shows “food away from home” costs have risen 7.6% in the same 12-month period – 5.5% less than at-home food costs.

How is it that dining out is getting more expensive at a slower rate than eating at home? Experts say that restaurants have advantages with regard to the supply chain that allows them to get the ingredients they need at cheaper wholesale prices. They also lock in lower prices in advance by making large up-front orders directly from agricultural producers. Because the food service industry pays less for food than we do at the grocery store, their prices aren’t going up as fast as retail food costs.

So, are the experts right? Is it really cheaper to dine out than to cook at home? In a word, no!

Back in 2018, before the pandemic and its resulting inflation, Pricenomics did a study of food prices and found that dining out is—as we’ve long known—five times more expensive than cooking at home. They calculated an average price of $20.37 for dining out vs $4.31 for cooking at home. Even if those prices rose disproportionately, dining out still doesn’t get more affordable. For example, if we use the 12-month increases from the CPI cited above, dining out rises to $22.15 (a 7.6% rise of the base price) and home cooking rises to $4.87 (a 13.1% increase). So now, post inflation, the price of dining out isn’t quite 5 times the price to cook at home, but it’s still 4.5 times more expensive.

Experts citing the Consumer Price Index to claim to dine out is now less expensive than home cooking are not factoring in the big difference in costs to start with. This may seem obvious to the casual reader—after all, restaurants must pay for staff to cook the food, higher utilities for their facilities, leases on their restaurant spaces, etc. When you buy restaurant food, they pass all those extra costs onto you. So, the little bit they save from buying their ingredients wholesale cannot make up for all those other costs. This means that cooking at home will have to get a LOT more expensive than dining out for their costs to be truly comparable.

Eating at home

We’ve established by now that our standard advice about cooking at home vs dining out holds up, but there is still an important story to be told here.

A price change of 13.1% in one year is important, and we may not have seen the peak of our current bout of inflation. Consumers will have to adjust their shopping habits to try to control costs.

How to cut costs when shopping for groceries:

  • Check out our video
    Six Tips for Saving Money at the Grocery Store for a quick overview of the topic.
  • Plan Ahead
    Creating a meal plan helps you craft a budget that you can stick to. When shopping, plan every trip to the grocery store and stick to your shopping list! When it comes to your meal planning, have a plan in place to use leftovers and avoid having excess ingredients you’ll end up throwing out.
  • Comparison Shop
    Every dollar counts, so start tracking what things cost from store to store. Update your notes regularly so you know the best place to get each item. Also include farmers’ markets in your comparison shopping. You’ll be able to comparison shop from multiple vendors at the same location, and anything you buy there will be local and in-season, so you can save money and eat healthier.
  • Get Discounts
    There are many things to incorporate here to get all of the discounts available: coupons, apps, sales, buying in bulk, store loyalty cards… take advantage of every angle. Check out our Essential Couponing course materials to learn more.
  • Change Brands
    Inflation has already caused most of us to give up on some of our name-brand items and switch to generics or store brands. Figure out which higher-priced name brand items you can live without and keep trying generic versions until you find the ones you like.
  • Substitute Ingredients
    Some more expensive ingredients can be substituted without a noticeable effect. Figure out when to use canola oil instead of olive oil. Use Greek yogurt instead of sour cream, cream cheese, mayonnaise, butter, or cottage cheese in recipes. You can even substitute the same kind of food for a cheaper variant, like milk instead of cream or chicken thighs instead of breasts.
  • Take care of your health
    Whatever you do to save money when shopping for groceries, always keep health and nutrition in mind. If you cut back on meat to save money, you’ll want to be sure to replace it with high-protein substitutes that include iron, vitamin B12, etc. Don’t substitute carbohydrates for protein! Also, if you save money by buying dented canned goods that have been marked down, follow the USDA’s advice and inspect every can carefully-don’t risk botulism to save a little bit of money.

Meal Kit Subscriptions

There’s another large category of food shopping that lies between restaurant takeout and preparing your own meals at home: meal kits.

These kinds of subscription-based meal kits send you everything you need to prepare a healthy meal with little to no food waste. There are dozens of meal kit subscriptions available, including:

•  Hello Fresh, the largest such service at $9.99 per serving
•  Home Chef, starting at $6.99 per serving
•  Blue Apron, starts at $11.99 per serving
•  Sunbasket, $9.99 per serving
•  EveryPlate, $4.99 per serving
•  Freshly, pre-cooked meals for $8.99 per serving
•  Purple Carrot, plant-based meal kits and prepared meals for $13.25 per serving
•  HungryRoot, Plans start at $70
•  Dinnerly, starts at $4.99 per adult-sized serving
•  Green Chef, certified organic meals for $12.99 per serving
•  BistroMD, focused on weight loss, diabetes, etc. around $10.99 per serving
•  Factor, starts at $11.00 per meal
•  Splendid Spoon, plant-based mix & match around $11 per meal
•  Daily Harvest, gluten and dairy free, $6-12 per item
•  Marley Spoon, Martha Stewart’s meal kit service for around $9.49 per portion
•  Mosaic Foods, plant-based meals at $5-12 per serving
•  Trifecta Nutrition, fitness-focused meals for about $100 a week
•  Sakara Foods, Plant based, wellness focused plan for $29 per meal
•  Gobble, $6 per meal introductory offer
•  Fresh n’ Lean, ready-to-eat meals at $8.49 per meal
•  Thistle, fully prepared meals for $11.50 per meal
•  Territory Foods, prepared by local chefs for $11-14 per meal
•  Pete’s Paleo, paleo meals for $15-20 per meal
•  One Potato, family-friendly organic for $8.32 per serving
•  CookUnity, chef-centered meals around $8-12 per meal

Prices and features vary greatly. Some services get as low as $5 per meal per person, while others end up well over $20 per meal. Some focus more on providing meatless meals, while others have health-related options for people with diabetes, celiac disease, and food allergies. Be sure to do your research as many services include free shipping in the subscription cost, while others add extra delivery charges.

Generally speaking, the price to use a meal kit service ends up somewhere between making everything from scratch vs. buying prepared food from restaurants. The Priceonomics article linked above found it was 5 times more expensive to dine out than to prepare meals at home, but using meal kits was only around 3 times more expensive than fully preparing meals at home. That pricing ratio seems to be the consensus among food & budget experts around the web.

Why use meal kits?

Besides being cheaper than dining out, meal kits solve the problems of time, motivation, organization, and inspiration. Many people simply don’t have the time or energy to do all of the shopping and meal planning a household requires. Meal kits provide a way to have all of the meal planning and shopping done with one easy subscription.

Many meal kit services prepare the ingredients for cooking, too. Services vary, but most meal kits limit the amount of effort the home chef has to do to get a meal prepared.

Pros of meal kits:

•  Less time spent planning, shopping and preparing ingredients
•  Less expensive than take out or dining in restaurants
•  Little to no food waste
•  Portions are controlled
•  Nutritional needs are taken care of
•  Subscribers learn to cook and experience new recipes and foods
•  Easier to prepare than fully home-cooked meals

Cons of meal kits:

•  Costs more than preparing everything yourself from scratch
•  Ingredients come individually packaged, which may not be environmentally friendly
•  You need to eat what you’ve been sent before ingredients go bad
•  Lack of flexibility; if you’re not in the mood for the meal kit you have on hand, that’s too     bad

Ultimately, meal kits are a luxury, as they cost more than doing your own shopping. But if the alternative is ordering takeout five nights a week, they’re certainly a better option.

One strategy a lot of people use is to rotate meal kit subscriptions. Try one and take advantage of any introductory price they offer. When that lower rate expires, cancel and switch to the next. You can do this for a long time before you run out of meal kits with introductory offers. Plus, you’ll get to try enough different kits to figure out which ones you like the best.

Another feature of meal kits is they send you the recipe that you can replicate with your own ingredients. Many people use a service during its introductory period just to get the recipe ideas. Then they switch back to cooking everything from scratch but keep the meal kit recipes they like the best.

If you’re currently ordering takeout and spending five times as much as you have to, a meal kit subscription might be worth trying. Once you’ve picked up the habit of preparing your own meals, you can transition to doing it all yourself and save even more.

Inflation has made it harder for all of us to stick to our food budgets and could be “eating up” (pun intended) the extra money you may be putting toward savings, a Debt Management Plan, or debts/expenses in general. So now more than ever we need to find ways to not only eat healthy but also to stick to our financial goals. Overall, comparing cooking at home to eating out to meal plans, we opt to sticking to cooking your own meals or low cost meal plans compared to dining out for affordable eating. Another bright side… you may find additional savings with leftovers!

Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.Speak to our certified Financial Coaches to review all of your options and discuss best strategies for getting out of debt.

About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over two decades of experience in the industry.