6 ms·

> If land is incredibly expensive and one intends to eat most of their meals out, it doesn’t actually make sense to rent a full kitchen. It is hard to beat the

> If land is incredibly expensive and one intends to eat most of their meals out, it doesn’t actually make sense to rent a full kitchen. 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. From a purely economic perspective, a kitchen at home, when other sources of food are widely available, is tough to justify. From a wider point of view, a kitchen is easier to justify as a nice luxury, being that cooking at home is something that people enjoy doing. When land is cheap, it is a luxury that can be afforded. When land is expensive, it is not surprising that it's the first thing to go. Similar to why people are likely to maintain a garden at home when land is cheap, but not when land is expensive.

sofixa 6y ago
> 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.
- randomdata 6y ago
  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.
  - MichaelZuo 6y ago
    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.
  - inglor_cz 6y ago
    "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.
    - randomdata 6y ago
      There is a lot more to a standard kitchen than appliances. Like walls, floors, counters, etc. None of that comes free, or even cheap.
      - inglor_cz 6y ago
        Well, every room tends to have walls and floors. 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.
        randomdata 6y ago
        > 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.
0xffff2 6y ago
I worked as a line cook in college. The place I worked was in a HCOL city, but nowhere close to SF. Our general rule was that items should sell for about 4x the cost of ingredients to cover all overhead. I'm a salaried employ with no expectation of overtime, so my opportunity cost to cook for myself is essentially $0/hr, but even if I factor in a fairly reasonable $15/hr for my own labor, I'm still easily under 4x raw input cost for most dishes, which makes sense since I don't have to pay (or already pay regardless) other overheads like rent, taxes and FOH staff.
- nostrademons 6y ago
  I think that there are a couple effects here. One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, and because the transaction costs of finding a restaurant, driving to it, and waiting for food dwarf the food preparation time (indeed, if we're already in the car near food we're far more likely to eat out). Which brings me to... Transaction costs for meals out are really high, largely because of the automobile. Restaurants in the U.S. are spread out, with large amounts of parking that the restaurant owner needs to pay for. Because you have to hop in the car to go elsewhere, you're far more likely to wait for a table rather than find a less full restaurant. That means restaurant owners need to build in waiting space (more rent), and host staff (more labor), and carefully predict staffing needed (more labor). It means patrons waste time waiting for a table, and then ordering, and they're locked into their choice of restaurant once they show up, which means that they're more inclined to research options carefully before picking where to eat. I visited my in-laws in Taiwan last year, and the food culture & economics are dramatically different there. Restaurant meals out are the equivalent of $US4-5. Most restaurants are what we'd call fast-casual: you walk in, the menu is posted behind the counter, you order, get your food, and sit down at a small number of tables. When you're done you wipe up your area and bus your food yourself. The whole restaurant is usually family owned & operated; there might be 3-4 employees total. If the place is full, you walk next door to the equally-good restaurant there. ("Destination" restaurants like Din Tai Fung do exist, and they charge American-ish prices of $20-50/plate.) This is all within walking distance of your apartment, so when you're hungry you take the elevator down, walk outside, and find someplace, with minimal search or transportation costs. As a result, there's a big culture of eating out, and most people have just a kitchenette and don't use it for many meals.
jfim 6y ago
> 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. From a purely economic perspective, a kitchen at home, when other sources of food are widely available, is tough to justify. It really depends what one eats. If one is okay with eating widely available low cost foods, then yes, commercial kitchens are more efficient. For example, Burger King here will sell you a three whopper, three cheeseburger, and three fries family meal for $14.99 (silicon valley prices, likely lower in the rest of the nation). Pretty hard to compete against that if one considers the cost of making a burger from scratch and cleaning up the mess from deep frying at home. But fast food is a low margin high volume business. Looking at higher margin items, like what you'd eat in a steakhouse, the economics of a kitchen change dramatically. For example, I recently bought four USDA prime tenderloins from Costco for roughly $58 total. Each one of them, plated and served, would be $35 to $50, excluding taxes and tip. Given that cooking those is pretty easy (either with just an inexpensive cast iron pan and oven, or using sous vide if one wants to get fancy) and takes a grand total of five to ten minutes to make, then the kitchen becomes a much better value proposition. And that's saying nothing of people with restrictive diets, where oftentimes it's just easier to cook at home. Depending on which friend I'm dining with, the restrictions might be celiac (strict no gluten, not fad diet no gluten), low/no carb, pescatarian, vegan, religious dietary restrictions, nut allergies, and so on. Sometimes the combinations basically exclude most of the restaurants out there, and at that point, it's easier to cook at home than go out only to be restricted to a few items in the menu.
ashtonkem 6y ago
This doesn't pass the sniff test to me, at least for most COL levels. The only way that our household was able to reduce our food budget by eating out was to massively reduce quality in order to meet caloric needs. For roughly the equivalent quality of ingredients it was much cheaper for us to cook at home. And that's before we got a bigger house in a lower COL area with a chest freezer, which allows us to bank high quality ingredients when they're on sale or buy in bulk, especially for meat. I could probably eat cheaper still at McDonald's, but at the cost of my health. Subjectively, I don't think that cooking at home is a "luxury". Maybe being a foodie is an upper class thing given the extra cost and time investment associated with it, but historically huge chunks of the middle class have cooked at home for a large chunk of their meals. Generally speaking only the lowest economic strata of the working poor depend heavily on fast & packaged food, and that's largely a factor of both time and ingredient availability. If you're working two or three jobs or live in a food desert, you're not going to cook at home no matter what the unit economics are. That being said, I do have a general theory about high COL businesses. After moving out of our high COL city (Santa Monica, for the record), we've started building out a home gym and programming our own workouts. What we realized is that while our old gym provided a lot of knowledge and social structure, the primary service they offered was land and equipment. They were able to charge a premium because we literally couldn't afford enough land to put the equipment. Now that we live in a lower COL city with a large garage, the financial balance points towards it being cheaper to just buy all the equipment rather than paying for a gym membership. At the extreme end of land cost, I can see this even applying to kitchens too, since a good kitchen takes up a fairly large portion of an apartment.
- randomdata 6y ago
  > This doesn't pass the sniff test to me Is that because, based on other comments here, you're already invested in a kitchen and, as a result, are forgetting to factor in that substantial cost? But that would be like if you owned your own silicon fab. You would no doubt also wonder how anyone could afford to buy their processors from Intel for hundreds of dollars when you can make your own for pennies. But you're not actually making them for pennies when you need to lay the capital upfront. > Subjectively, I don't think that cooking at home is a "luxury". The luxury isn't cooking. The luxury is being able to have a large room full of machinery dedicated to preparing meals for, on average, 2.5 people. These days, average people can barely afford living spaces as-is. That room adds to the cost substantially and is not likely to be recouped against eating out, unless eating out means eating at places that are selling entertainment alongside food. It is true that the typical home kitchen can be more cost effective than food entertainment, but that's only because your home kitchen does not have to provide the entertainment portion. I do not see these being reasonably comparable when talking about the cost of prepared food. Once you add the cost of equivalent entertainment at home, the food entertainment restaurant looks pretty cheap again. > Generally speaking only the lowest economic strata of the working poor depend heavily on fast & packaged food Generally speaking, the poor have to buy used houses that already have kitchens for a lot of historical reasons. They have little opportunity to not become invested in the means of production, even when it is not ideal from a purely economic point of view. There are exceptions of places without kitchens, as mentioned earlier in the thread, but they are typically only found where land values are high, where the cost of keeping an existing kitchen is higher than repurposing it. The wealthy, who are most likely to build new houses, that will one day be sold to the poor, want the luxury of having a kitchen even when it is not economically sound, and so the cycle continues.

sofixa 6y ago

> 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.

randomdata 6y ago
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.
- MichaelZuo 6y ago
  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.
- inglor_cz 6y ago
  "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.
  - randomdata 6y ago
    There is a lot more to a standard kitchen than appliances. Like walls, floors, counters, etc. None of that comes free, or even cheap.
    - inglor_cz 6y ago
      Well, every room tends to have walls and floors. 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.
      - randomdata 6y ago
        > 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.

0xffff2 6y ago

I worked as a line cook in college. The place I worked was in a HCOL city, but nowhere close to SF. Our general rule was that items should sell for about 4x the cost of ingredients to cover all overhead. I'm a salaried employ with no expectation of overtime, so my opportunity cost to cook for myself is essentially $0/hr, but even if I factor in a fairly reasonable $15/hr for my own labor, I'm still easily under 4x raw input cost for most dishes, which makes sense since I don't have to pay (or already pay regardless) other overheads like rent, taxes and FOH staff.

nostrademons 6y ago
I think that there are a couple effects here. One is that $15/hr is a dramatic underestimate of the opportunity cost for many of the people who would otherwise be eating out. Minimum wage in Mountain View & Sunnyvale is $16.05/hour. My wife & my salaries, if converted to hourly, would be several hundred / hour. We cook at home because we're salaried and so don't actually reap that opportunity cost in cash, and because the transaction costs of finding a restaurant, driving to it, and waiting for food dwarf the food preparation time (indeed, if we're already in the car near food we're far more likely to eat out). Which brings me to... Transaction costs for meals out are really high, largely because of the automobile. Restaurants in the U.S. are spread out, with large amounts of parking that the restaurant owner needs to pay for. Because you have to hop in the car to go elsewhere, you're far more likely to wait for a table rather than find a less full restaurant. That means restaurant owners need to build in waiting space (more rent), and host staff (more labor), and carefully predict staffing needed (more labor). It means patrons waste time waiting for a table, and then ordering, and they're locked into their choice of restaurant once they show up, which means that they're more inclined to research options carefully before picking where to eat. I visited my in-laws in Taiwan last year, and the food culture & economics are dramatically different there. Restaurant meals out are the equivalent of $US4-5. Most restaurants are what we'd call fast-casual: you walk in, the menu is posted behind the counter, you order, get your food, and sit down at a small number of tables. When you're done you wipe up your area and bus your food yourself. The whole restaurant is usually family owned & operated; there might be 3-4 employees total. If the place is full, you walk next door to the equally-good restaurant there. ("Destination" restaurants like Din Tai Fung do exist, and they charge American-ish prices of $20-50/plate.) This is all within walking distance of your apartment, so when you're hungry you take the elevator down, walk outside, and find someplace, with minimal search or transportation costs. As a result, there's a big culture of eating out, and most people have just a kitchenette and don't use it for many meals.

jfim 6y ago

> 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. From a purely economic perspective, a kitchen at home, when other sources of food are widely available, is tough to justify. It really depends what one eats. If one is okay with eating widely available low cost foods, then yes, commercial kitchens are more efficient. For example, Burger King here will sell you a three whopper, three cheeseburger, and three fries family meal for $14.99 (silicon valley prices, likely lower in the rest of the nation). Pretty hard to compete against that if one considers the cost of making a burger from scratch and cleaning up the mess from deep frying at home. But fast food is a low margin high volume business. Looking at higher margin items, like what you'd eat in a steakhouse, the economics of a kitchen change dramatically. For example, I recently bought four USDA prime tenderloins from Costco for roughly $58 total. Each one of them, plated and served, would be $35 to $50, excluding taxes and tip. Given that cooking those is pretty easy (either with just an inexpensive cast iron pan and oven, or using sous vide if one wants to get fancy) and takes a grand total of five to ten minutes to make, then the kitchen becomes a much better value proposition. And that's saying nothing of people with restrictive diets, where oftentimes it's just easier to cook at home. Depending on which friend I'm dining with, the restrictions might be celiac (strict no gluten, not fad diet no gluten), low/no carb, pescatarian, vegan, religious dietary restrictions, nut allergies, and so on. Sometimes the combinations basically exclude most of the restaurants out there, and at that point, it's easier to cook at home than go out only to be restricted to a few items in the menu.

ashtonkem 6y ago

This doesn't pass the sniff test to me, at least for most COL levels. The only way that our household was able to reduce our food budget by eating out was to massively reduce quality in order to meet caloric needs. For roughly the equivalent quality of ingredients it was much cheaper for us to cook at home. And that's before we got a bigger house in a lower COL area with a chest freezer, which allows us to bank high quality ingredients when they're on sale or buy in bulk, especially for meat. I could probably eat cheaper still at McDonald's, but at the cost of my health. Subjectively, I don't think that cooking at home is a "luxury". Maybe being a foodie is an upper class thing given the extra cost and time investment associated with it, but historically huge chunks of the middle class have cooked at home for a large chunk of their meals. Generally speaking only the lowest economic strata of the working poor depend heavily on fast & packaged food, and that's largely a factor of both time and ingredient availability. If you're working two or three jobs or live in a food desert, you're not going to cook at home no matter what the unit economics are. That being said, I do have a general theory about high COL businesses. After moving out of our high COL city (Santa Monica, for the record), we've started building out a home gym and programming our own workouts. What we realized is that while our old gym provided a lot of knowledge and social structure, the primary service they offered was land and equipment. They were able to charge a premium because we literally couldn't afford enough land to put the equipment. Now that we live in a lower COL city with a large garage, the financial balance points towards it being cheaper to just buy all the equipment rather than paying for a gym membership. At the extreme end of land cost, I can see this even applying to kitchens too, since a good kitchen takes up a fairly large portion of an apartment.

randomdata 6y ago
> This doesn't pass the sniff test to me Is that because, based on other comments here, you're already invested in a kitchen and, as a result, are forgetting to factor in that substantial cost? But that would be like if you owned your own silicon fab. You would no doubt also wonder how anyone could afford to buy their processors from Intel for hundreds of dollars when you can make your own for pennies. But you're not actually making them for pennies when you need to lay the capital upfront. > Subjectively, I don't think that cooking at home is a "luxury". The luxury isn't cooking. The luxury is being able to have a large room full of machinery dedicated to preparing meals for, on average, 2.5 people. These days, average people can barely afford living spaces as-is. That room adds to the cost substantially and is not likely to be recouped against eating out, unless eating out means eating at places that are selling entertainment alongside food. It is true that the typical home kitchen can be more cost effective than food entertainment, but that's only because your home kitchen does not have to provide the entertainment portion. I do not see these being reasonably comparable when talking about the cost of prepared food. Once you add the cost of equivalent entertainment at home, the food entertainment restaurant looks pretty cheap again. > Generally speaking only the lowest economic strata of the working poor depend heavily on fast & packaged food Generally speaking, the poor have to buy used houses that already have kitchens for a lot of historical reasons. They have little opportunity to not become invested in the means of production, even when it is not ideal from a purely economic point of view. There are exceptions of places without kitchens, as mentioned earlier in the thread, but they are typically only found where land values are high, where the cost of keeping an existing kitchen is higher than repurposing it. The wealthy, who are most likely to build new houses, that will one day be sold to the poor, want the luxury of having a kitchen even when it is not economically sound, and so the cycle continues.