> It is hard to beat the economies of scale of a restaurant, as much as the "you only need to factor the cost of raw food" camp like to tell otherwise
I'd be interested in seeing your math on the subject, and it probably depends on location and at what rate do you "bill" your time, but restaurants have a lot of overhead ( property, staff, taxes) that offsets economies of scale.
Even without going all-in with cheap foods ( like rice or potatoes), I can't imagine eating out in similar quality and quantity being cheaper than cooking it yourself ( again, depending on how you count your time spent).
Of course McDonald's cheapest items will be cheaper than making yourself lobsters, but that's not really a fair comparison.
It seems the average Big Mac meal is $6 these days. It provides approximately 1,000 calories, and the average person needs approximately 2,000 per day, so we'll assume you'll need to order two. That puts the food costs at $12 per person.
The average cost to install a kitchen is around $60,000. If we assume a rate of return of 5%, that is $3,000 per year right there that the money needs to provide to justify it being invested in a kitchen and not invested elsewhere. That covers more than half of the individual restaurant cost right there and leaves only about $4 for everything else. Does $4 even begin to cover the time it would take you to make your own Big Mac meal (I agree that it isn't fair to compare with lobster) at home once, let alone twice? While the average home has 2.5 people, not just one person, we've only just scratched the cost of having a kitchen. We still have ingredients to pay for, the opportunity cost of occupying the land, electricity/gas, taxes, repairs and maintenance, etc. You're blowing your $30 budget in pretty short order. Okay, if you are one of those TV families with 14 kids, then perhaps you can gain some economies of scale at home.
Yes, if you've already invested heavily in having your own kitchen, then you can become more price competitive with a professional kitchen. Though that is true of a lot of things. After you've invested heavily in having your own silicon fab, you're going to laugh at how much Intel is charging for their chips as well. The means of production comes with a cost, though. And while it may be a sunk cost for most, it should not be ignored on that basis.
The real world is complicated, though.
1. If you're buying a used home, as most people do, they rarely come with silicon fabs but virtually always come with a kitchen, leaving you little choice in whether or not you want to invest in one. If land is cheap, it usually doesn't make sense to divest yourself from owning a kitchen. However, if land is expensive, then the calculus changes. When land is expensive, the land occupied by a kitchen can be put to more productive use that outweighs the investment you have already made.
2. Because most people are invested in home kitchens already, restaurants aren't optimized for providing food you want to eat on a regular basis. Eating a Big Mac twice a day, every day isn't sustainable. But at the other end, non-fast food restaurants focus on providing entertainment. Your kitchen can compete with them as your kitchen doesn't have to be entertaining. To be fair with them, we would have to include the cost of having a living room, TV, Netflix account, etc.
"The average cost to install a kitchen is around $60,000."
An ordinary home kitchen? That is ... quite a lot.
I am in a different part of the world, but I still managed to equip a home kitchen with reasonable-quality appliances (no scraping the barrel, mostly Bosch and Whirlpool) for some 4000 dollars in 2019.
Unless the talk is about some big ass mansion, I cannot imagine spending 60 000 USD on a kitchen, the very price of the materiel used does not add up to even tenth of that value even if you choose mid-range stuff.
You can have a nice 300 x 60 cm wooden counter for like 200 USD.
> Well, every room tends to have walls and floors.
And every room would be equally judged against its economic value. It could very well be that having an maintaining your TV room is more expensive than going to the movie theatre as well. If you were designing a domicile based purely on optimizing cost, as posed earlier, it is very likely that it wouldn't be anything more than a small bedroom, with everything else more cost effectively provided by outside third-parties at scale.
But there is, of course, more to life than numbers. A small bedroom and nothing more does not seem like an overly desirable place to live. Being able to watch TV at home is nice. Being able to cook at home is enjoyable. However, the topic is what it is and as a result those factors don't matter for the purposes of this particular discussion.
> It seems the average Big Mac meal is $6 these days. It provides approximately 1,000 calories, and the average person needs approximately 2,000 per day, so we'll assume you'll need to order two. That puts the food costs at $12 per person
Yeah, i assumed so. Eating Big Macs is... let's say suboptimal. If you eat only that, you'll probably have all sorts of health issues. When counting actual food, fresh and with vegetables and all that, it's slightly more expensive than Big Macs. Around here, cheapest option for a decent actual meal is ~8-10/eur/person.
> The average cost to install a kitchen is around $60,000
Seriously? In France fancy kitchens are at 10k, "starter" ( recommended if you're going to let or for first buy) are at 2k, everything included. I guess if you start from $60k, you need to cook quite a bit more to make it financially viable.
And that's if you have close to no dietary or allergic restrictions.
$60,000 is an over-estimation; that is what a high end kitchen with nice materials and custom cabinets would cost. The typical cost is $13k to $37k with the median being $25k nationally[0], depending on the size of the kitchen and local labor costs.
> Around here, cheapest option for a decent actual meal is ~8-10/eur/person.
Same here, but always coupled with a value of entertainment at that price point. You cannot directly compare the entertainment experience to your home kitchen, as already mentioned. You, at least, would have to include some of the cost of your living room, TV, Netflix account, etc. or whatever analogs of entertainment you have in your home. At which point 10 eur is going to look pretty cheap.
> "starter" ( recommended if you're going to let or for first buy) are at 2k, everything included.
Whoa. I'm not sure you could even put up one wall of a kitchen for $2k in North America. Maybe if you're buying a stove and cooking under the stars you could get in for that amount. That's not what anyone I know would call a kitchen. Definitely not what is being referred to as a kitchen in this thread.
What exactly are you including in the cost of your kitchen? A cheap stove and refrigerator are about $500 each. Cabinets for the small but fully functional kitchen in my small bay area apartment could be had for as little as $1000 based on a quick look at Home Depot. Countertops can vary widely, but lets throw in another $2000. That could be enough for granite if you don't have too much counter space.
For quick and dirty estimates, it's reasonable to double your cost of materials to get a total job cost. Framing is going to be less than $1000 in lumber (probably a lot less) for an apartment kitchen and that's at today's historically rather high lumber prices. Electrical is going to be maybe $500 at most. I'm a lot less versed in plumbing so I can't estimate that off the top of my head, but lets say that it somehow comes out to as much as the framing and electrical combined. Adding all that up and doubling it brings us to $6000 in construction costs.
All in that's ~$10,000.
$2000 isn't realistic if you're counting all materials from the ground up, but $60,000 is a comical number. That might be the average cost of your typical McMansion kitchen with high end appliances, but it's not representative of what it's going to cost to build a kitchen in a small to medium sized rental apartment.
> $2000 isn't realistic if you're counting all materials from the ground up
Kitchens certainly don't magically spring up from the ground after the spring rain. You naturally would have to count every last input cost for any kind of meaningful comparison. The restaurants certainly are when pricing their food.
> Adding all that up and doubling it brings us to $6000 in construction costs.
For, say, a 150 sq.ft. kitchen (the average sized kitchen)? Which means if we theoretically placed 10 of those rooms side by side, totalling 1,500 sq.ft., you could build what is essentially an entire house for $60,000? I realize that doesn't include all the fixtures, but it still seems quite low. Labour must be pretty cheap where you're from.
I don't know what to tell you except I have experience actually doing this. A full house needs a roof and foundation, which I neglected in my original estimate. I don't have time to work out an estimate on an entire roof and divide it to assign partial cost to the kitchen, but I doubt the roof and foundation together are going to add any more than anther $6000 for the kitchen alone. The overarching point is that we're still a long way from $60,000 for a kitchen.
Seems to be a lot of that going on around this topic. If you don't count every last penny, you're not being fair to what it costs to cook at home. I get it, if you only count the receipts of your rice and bean purchases, it will be pennies a day. That's not your cost, though.
> The overarching point is that we're still a long way from $60,000 for a kitchen.
I did mention that labour might be cheap where you are from. Prices can swing wildly from place to place. Labour is, by far, the largest cost in the construction, so it wouldn't be too surprising to see the cost of the final product swing widely alongside that.
The good news is that I'm not sure the exact amount matters much at the end of the day as if labour is cheaper, restaurants will also be able to produce food cheaper. No matter how you slice it, you're just not going to be able to compete with the economies of scale of a restaurant.
But ultimately it doesn't matter as people don't cook at home for rational economic reasons, they cook at home because it is an enjoyable activity. You definitely don't have to sell me on that. I love cooking. I would never trade my kitchen for an extra dollar in my pocket.
Indeed the all in amortized cost of a full, ergonomic, kitchen in downtown SF, or that of any major city in a developed country really, doesn’t make much sense on a rational basis.
I wonder how long it will take for the majority of downtown housing to changeover.
>But at the other end, non-fast food restaurants focus on providing entertainment.
Could you expand on this? I have no idea what you mean. Aside from some niche restaurants like Benihana, I can't think of any sit down restaurant at any price point that provides any more entertainment than McDonalds.
Non-fast food restaurants spend a lot on locations (for nice views, people watching, etc.) interior build-out (fancy design, murals, furniture, music systems, etc.), and staff (attractive young hosts, servers, etc.). They also market themselves in particular ways to bring in specific groups of clientele.
None of that has to do with the food in any way. I assume this is what the parent poster means by “entertainment”: all the reasons you would go to a restaurant other than food.
I'd be interested in seeing your math on the subject, and it probably depends on location and at what rate do you "bill" your time, but restaurants have a lot of overhead ( property, staff, taxes) that offsets economies of scale.
Even without going all-in with cheap foods ( like rice or potatoes), I can't imagine eating out in similar quality and quantity being cheaper than cooking it yourself ( again, depending on how you count your time spent).
Of course McDonald's cheapest items will be cheaper than making yourself lobsters, but that's not really a fair comparison.