Why the cost of eating out is rising faster than the cost of eating at home

What’s for dinner tonight?
What’s for dinner tonight?
Image: REUTERS/Mike Segar
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Eating out has always been seen as a more expensive treat than dining at home, but the gap between the costs of eating in restaurants and the costs of making food at home is widening.

In the last year, the cost of meals made at home increased 2%, according to US Bureau of Labor Statistics data. Meanwhile, the costs of eating out increased 9%.

Part of that is due to inflation, such as the heightened pressure of wage gains—whether due to states mandating minimum wage increases or businesses upping pay in response to the labor shortage. Some restaurants, such as Chipotle, which raised wages to an average of $15 an hour this year, are pushing the costs on to customers, hiking menu prices 4%. The restaurant meal is also getting more expensive due to more short-term reasons, such as rising food costs, particularly for meat.

Changing restaurant habits

More recently, though, the widening gap is a reflection of how we’re engaging with restaurants differently. In May, the average check was up 10% from last year, with quick-service restaurants, such as fast food chains, driving up that number, according to data from NPD, a market research company.

Why is that? The size of groups dining out are getting bigger, driving up higher spending at restaurants. With more people working at home, it’s no longer about one person commuting to the office and grabbing lunch alone, but grabbing lunch on the go for the family, says David Portalatin, a food services analyst at NPD. Eating out or picking up food also may be easier for families where both partners are working and kids are being homeschooled. To reflect that, restaurants have been promoting higher-costs promotions centered around family bundles, such as with KFC’s $30 “fill up” meals that can feed a family of four. “It’s now I need a solution for everybody that’s at home,” he says.

The increasing costs could be a long-term obstacle for restaurants, says Portalatin. The total volume of commercial restaurant traffic was pretty flat the past several years prior to the pandemic, according to NPD data, suggesting people are looking to save some money and cook at home. But fast food chains will be more resilient, as they are typically cheaper, he says. They have been gaining a larger share in the total restaurant industry, which, Portalatin says, is expected to continue throughout this year and 2022.