The Math Behind Why Cooking is So Much Cheaper Than Eating Out

When it comes to saving money, it’s helpful to focus on the areas that make the biggest difference.

Most people spend most of their money on the “big three” categories:

  • Housing
  • Transportation
  • Food

Hosing and transportation involve a small number of important decisions that get locked in for a long time. Food, on the other hand is a category where you make decisions weekly. Or sometimes daily.

There are lots of ways to approach saving money on food. But the most important place to start is to tackle the question: Is it cheaper to cook or eat out?

How We Keep Score

To determine which is cheaper (and by how much), we need a common unit so that we can compare apples to apples. The one we’ll use is price per person, per meal.

This metric is an important one when it comes to thinking about how to save money on food. There are 365 days a year and most people eat 3 meals a day. This means you eat 1,095 meals a year. Let’s assume you skip some meals and eat about 1,000 meals a year.

This means that every time you lower the average cost of a meal by a dollar, you lower your annual food cost by $1,000.

By the way, that’s per person.

If you have a family of four and you lower the average per person, per meal cost from $6.50 to $4.50, you’ll save $8,000 on food over the course of a year:

  • $6.50 – $4.50 = $2 saved per person per meal
  • $2 * 4 people = $8 total per meal
  • $8 per meal * 1,000 meals/year = $8,000 annual savings

How Much Does It Cost to Eat Out?

To start our comparison, let’s determine a baseline cost for eating out.

This isn’t as much about doing the math as observing the prices charged by various dining establishments.

I think it makes sense to assign restaurants to one of three tiers:

1Frugal Fast Food$3-$5
2Fast Casual$5-$10

Frugal Fast Food

I remember when a lunch that cost more than $5 was considered expensive. Then, things shifted. A lunch that didn’t cost much more than $5 was considered pretty good. Now, it almost seems cheap to get lunch for under $10.

Pretty much the only way to get lunch under $5 when you’re eating out is to order off the dollar menu at a place like McDonald’s. You could also split a pizza at Pizza Hut.

You’ll notice that even when you go somewhere cheap like McDonald’s or Taco Bell, most of the “value” meals are actually more than $5 and don’t even belong in this category anymore.

These options are probably pretty good for your wallet, but not your waistline.

Fast Casual

Like we just mentioned, most fast food meals actually now fall into this middle tier.

But this category also opens up other options. Healthier options with no drive thru. Think Chipotle or Panera.

Unfortunately, inflation is alive and well here as well. At many fast casual places we’re starting to see per person prices creeping up over $10. Especially if you order a drink.


In this case, a restaurant is pretty much any place where you are served at your table and pay a tip to your server.

Obviously, the prices is this tier can vary dramatically. But $10 seems to make sense as a floor.

Sure you might be able to find a lunch special or a coupon, but when you factor in the tip, it’s pretty rare for the bill to come to less than $10 for one person.

Coming Up With a Single Number

How much you pay on average eating out will depend on a lot of factors. One of them is how often you eat at the different price tiers. As an example, let’s assume the following:

For every ten times you eat out:

  • One meal is a $4 meal from the frugal fast food tier
  • Seven meals cost an average of $7.50 from various fast casual chains
  • Two meals are eaten at sit-down restaurants
    • One is a cheaper $12 meal
    • One is a more expensive $20 meal

Here’s the math: ($4 + ($7.50 * 7) + $12 +$20) / 10 = $8.85/meal

How Much Does It Cost to Cook?

This is a harder question to answer. Each meal you cook is assembled from ingredients that you purchased separately. Chances are, you aren’t using up all of the ingredient in any one meal. For perishable ingredients, there’s a decent chance you’ll throw at least some of it away.

We have two ways to approach calculating the cost of cooking:

  • The bottom-up method (work from ingredient prices up to meals)
  • The top-down method (look at your total grocery bill and work down to per-meal costs)

To be thorough, we’ll use both methods and compare the results

The Bottom-Up Method

Since we are trying to translate food costs into their per meal equivalents, we need a way of translating ingredient prices into meal costs.

The best way to do this is to use the same unit we use when talking about weight: The Calorie (technically the kilocalorie, but don’t be pedantic).

As Mr. Money Mustache once pointed out, if you assume that a person needs 2,000 Calories a day, then each meal should be about 667 Calories. He also observed that you can calculate the per meal cost of a single ingredient by calculating how much it costs per 667 Calories.

Since the cost of a meal is the weighted average cost of all the ingredients, you can determine the impact an ingredient will have on the meal by showing how much the meal would cost if all 667 calories came from that one ingredient.

Of course, this 667 Calorie assumption isn’t perfect. For instance, according to the book Burn: New Research Blows the Lid Off How We Really Burn Calories, Lose Weight, and Stay Healthy by Herman Pontzer, a 170 lb man like myself probably needs closer to 3,000 Calories a day to match my energy expenditure.

In the chart below, I’ll show the per meal cost assuming both 667 Calorie meals and 1,000 Calorie meals.

The Cost of Various Staple Ingredients

As research for this post, I went to the closest grocery store to my house to check prices. The grocery store in question is one of the higher-end grocery stores in town. You can probably beat these prices without breaking a sweat st discount grocers like Aldi, Costco, Wal-Mart, or Sam’s Club.

ItemSizeCaloriesPrice$/1,000 kcal$/667 kcal
All-Purpose Flour5 lb8,360$2.59$0.31$0.21
Sugar10 lb17,010$5.69$0.33$0.22
Canola Oil32 oz7,680$3.49$0.45$0.30
Long Grain White Rice5 lb8,000$3.89$0.49$0.32
Spaghetti Noodles1 lb1,600$1.00$0.63$0.42
Peanut Butter18 oz2,880$2.79$0.97$0.65
Extra Virgin Olive Oil34 oz8,040$8.99$1.12$0.75
Black Beans (can)15 oz735$0.85$1.16$0.77
Butter (salted)1 lb3,200$3.83$1.20$0.80
Black Beans (dry)2 lb2,080$2.69$1.29$0.86
Whole Milk1 gallon2,400$4.09$1.70$1.14
Bananas1 lb404$0.69$1.71$1.14
Sliced Whole Wheat Bread20 oz1,200$2.19$1.83$1.22
Red Potatoes5 lb1,635$2.99$1.83$1.22
Large Eggs181,404$2.79$1.99$1.33
Large Eggs12936$2.09$2.23$1.49
Extra Sharp Cheddar Cheese1 lb1,760$4.50$2.56$1.71
Ground Beef1 lb1,152$4.69$4.07$2.72
Carrots2 lb360$1.99$5.53$3.69
Organic Gala Apples2 lb522$2.99$5.73$3.82
Boneless, Skinless Chicken Thighs1 lb540$3.99$7.39$4.93
Boneless, Skinless Chicken Breast1 lb499$4.99$10.00$6.67

There’s a lot to break down here and I’ll save some of it for when we get to the tips for saving money at the end.

First some disclaimers:

The Diet Wars Strike Again

No matter your diet tribe, chances are you have objections to this chart. The low carb group really doesn’t like flour and sugar being at the top. The calorie counters probably think fewest calories by weight is the only thing worth focusing on.

I guess the vegetarians and vegans are happy to see meat as the most expensive ingredients, but probably don’t like that carrots and apples are right between beef and chicken.

Michael Pollan has suggested that one key of eating healthier might be spending more on your food. Based on these numbers, there clearly seems to be some truth to that. But you can still eat healthy while occasionally substituting towards the cheaper end of the chart.

I’ll leave you to interpret the data in light of your own dietary philosophy.

The Totals Need a Lot of Context

If you used this sheet as a grocery list, it would cost you about $73.80. Since this represents 72,397 Calories, that’s about 72 meals at 1,000 Calories a meal. This means that the per meal cost would be an absurdly low $1.02.

Obviously, this list doesn’t translate into 72 well-balanced meals. A huge percent of the calories come from a 10 lb bag of sugar.

But it does illustrate a point: By skewing your meals towards cheaper ingredients you can get very low per-meal costs.

Estimating a Per Meal Cost

This is difficult because there are a lot of factors at play. Each meal is a combination of many ingredients in varying quantities. Many ingredients that you will use are not even listed here.

Based on just the numbers we’ve looked at, you could construct a 1,000 calorie meal of half rice and half beans for a total cost of $0.82

Or you could go with a 1,000 calorie meal where a third is chicken thighs, a third is potatoes, and a third is carrots for $5.02

Of course, factors like getting ingredients on sale, as well as using different ingredients, proportions, and meal sizes can affect these numbers.

The Top-Down Method

Instead of working from ingredients to build hypothetical meals, we can look at grocery spending and divide by the number of meals they provided.

I was tracking my food spending religiously with this method from 2018 through most of 2019.

As the sole income earner for a family of five (then four) who got a great deal on my house and has no car payment, food is by far my family’s biggest expense. I have real skin in the game in trying to lower my food bill.

I would load all my transactions into a spreadsheet and sum up all the spending at restaurants. The number of restaurant transactions would tell me how many times we ate out.

I would subtract the number of meals out from the estimated total meals we ate that month. I also multiplied this estimate by .8 to be conservative and account for any skipped meals.

The True Cost of Cooking

Here were my actual numbers:

A few notes:

  • January 2018 was the month before I started focusing on controlling costs
  • The spike from October 2018 is due to a birthday cake and other food for my daughter’s first birthday party
  • A time period of well over a year is reflected, more than enough to account for variation and seasonality

Despite all the variability, it’s pretty clear that we were pretty consistently able to keep our per meal price between $2-$3.

Remember, this is our grocery bill divided by the number of meals we ate at home. The grocery bill consists of all the food we eat in the house (meals and snacks). It also includes various household goods like toilet paper that I didn’t take out. So if anything, our real cost was likely even lower.

We didn’t really have any crazy frugal grocery hacks other than the standard “buy things that are on sale” strategy.

35% of Meals, 50% of Cost

During the time I was meticulously tracking meal costs, cooking was always cheaper than eating out. Sometimes though, we’d have month where the difference was more stark than normal.

Consider what happened to us in September of 2018. Here’s our breakdown of eating out vs. eating in:

% of Meals% of Cost
Eating In65%50%
Eating Out35%50%

We ate almost 2/3 of meals at home and yet…fully half of our food spending was eating out (we actually spent $2 more on fast food and restaurants than we did on groceries).

The Verdict

This one is not even close. Cooking is cheaper, hands down.

When I was tracking my costs, we were spending between $2-$3 on meals we cooked. As we saw earlier, $3 is about the cheapest meal you could ever expect to find eating out. There’s basically no overlap. When it comes to cost, cooking and eating out are in different universes.

Sure, it’s possible to spend up to your eyeballs at the grocery store, but if you’re trying to be frugal it’s highly unlikely you’ll spend as much as you would eating out.

How to Save Money on Food

From the observations we’ve uncovered in this post, we can derive a few practical tips to save money on food.

Cook More, Eat Out Less

This is the most obvious takeaway.

Eating out is great, and you should still do it. But you can save money by shifting towards more meals in and less out.

Ironically, this will likely make you appreciate eating out more.

I remember in 2012 when my wife and I were DINKs (dual income, no kids). I ate out for lunch every day at work. At first, I loved it. Then I grew bored with it. Eventually, I became mildly disgusted at the prospect of visiting my once-beloved establishments for the thousandth time.

If you’ve ever had trouble deciding what to eat because you’re sick of all your usual places, the solution is clear: Eat out less. You want the meals you’re paying more for to be ones you look forward to and enjoy. This seems like it should be obvious, but I can promise you that 95% of people get this exactly backwards.

Eat Less Meat

You have no idea how much pain it caused me to write those last three words. I love meat. Meat is the king of all food groups. I think steak is proof that God loves us and wants us to be happy. I could spend hours rhapsodizing on the tender perfection of barbecued brisket. I’m fully convinced that half the problems of western civilization could be solved by men eating more meat.

But you saw the chart.

Meat is among the most expensive sources of calories out there.

Fortunately, there are lots of cheaper sources of protein like cheese, peanut butter, and eggs (and rice and beans).

Even within meat, you can save money by switching away from the expensive boneless, skinless chicken breast and toward a cheaper meat like ground beef. That won’t make the Diet-Heart Hypothesis people happy, but when it comes to diet, there’s no way to make everyone happy.

The fact that meat is more expensive might just mean that you pay extra attention and buy it when it’s on sale (and freeze any extra).

Save the Leftovers

One thing we haven’t talked about yet is waste. I mentioned how many Calories your money buys at the grocery store, but some of that precious fuel unfortunately ends up in the garbage.

The more you can keep from going to waste, the more efficiently your dollars will be spent.

Back in 2018 and 2019 we had a pretty good system going where we would save all our leftovers, then have a “leftover meal” on Sunday. After finishing off the past weeks leftovers, we’d clean out the fridge.

Find and Perfect a Few Go-To Frugal Favorites

Right now my wife and I are loving a vegetarian fried rice that I’ve been making. As we’ve seen, rice is a super cheap source of calories.

The protein comes from eggs. Eggs are a delicious addition to fried rice and are a cheap source of protein. Usually we add them in the form of fluffy, scrambled eggs. The other day though, I was eating some leftover fried rice and I put a fried egg on top. If you’ve never had fried rice with a warm, runny yolk flowing through it, I’m sorry.

Downshift Tiers When Eating Out

Let’s bring up our chart again:

1Frugal Fast Food$3-$5
2Fast Casual$5-$10

If your current eating habits are to eat at restaurants 70% of the time when you eat out and you go to fast casual places 30% of the time, you could save a lot of money by flipping that ratio.

Anything you can do to shift your average visit away from tier 3 and closer to tier 1 will save you money.

The Bottom Line

You are going to eat a lot of food in your life. And you’re going to spend a lot of money doing so.

If you can lower your average per meal cost by just a dollar, you’ll save $1,000 per thousand meals. For most people this is about a year’s worth of eating.

If you have multiple people in your family, there is a multiplicative effect at work. Every time you shave $1 off the average per person, per meal cost, you lower your annual spending by $1,000 times the number of people in your family.

Since cooking is so much cheaper than eating out, cooking more and eating out less is a great way to spend less on food. Of course, you can also try lowering your eating out costs and/or your grocery bill as well. All the savings count.

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