Sunday, December 7, 2008

The cost of food

Since I do not hide my love of food, I am often asked why I don't cook for myself. My answer is that it oftens costs more to cook, not even including the implied cost of my time. For the really expensive meals, I'm not going to be able to reproduce the quality of food at home, so I have no hesitations about paying the price. For the cheap everyday meals, here's an example of why I don't cook:

This large bowl of chinese vegetables costs $2.50 from Rice-n-Tea at the Winmark Supermarket on Queens Boulevard (around 80th street). This includes the picking, cleaning, and cooking. How can someone beat that price cooking at home? People usually go to Rice-n-Tea for the 3 choices +rice+soup combo ($4.75, great deal) but I go there to pick up individual dishes as well because they're cheap and probably the best tasting of the combo meal places.

On a related note, there are things that I try my best not to order when I'm at a restaurant because it's more cost-efficient to attempt to reproduce at home. Any grilled or poached fish for example, because I don't need to pay $20 for a $5 piece of fish I can buy from the supermarket. I will frequently order sandwiches however, because they don't sell bread by the slice and I don't have a family of 5 to feed with a loaf of bread.

During a recent birthday dinner for a friend, I was in a conversation where I said that I only eat cheap sushi or expensive sushi. At first people are often appalled that I eat "cheap" sushi, but then I start to provide my reasoning. "Relatively inexpensive" sushi is often no better than "cheap" sushi. The neighborhood Japanese place, often owned and operated by Chinese or Korean people, get their prices from the built-in premium for Japanese food in America. However, a place that is designed to produce and sell larger quantities of sushi at discount prices will often have fresher fish because of the higher turnover. The best example is Chiyoda in midtown (41st street between 5th and Madison Aves). They sell large amounts of Japanese food at reasonable prices for that area. But the sign of a true Japanese company is that after 4pm, they discount the prices of items intended for the lunch rush, by up to 30%. This is the way it should be. In Japan, a supermarket will sell sushi/sashimi, and discount the product 3-4 times over the course of the day. Your "cheap" sushi will only be several hours less fresh than someone else's sushi, but at least you know that they don't keep the product overnight. I'm not sure you can say that about the fish you pay for at that "relatively inexpensive" neighborhood Japanese place.

I think that this concept is also one of the reasons why Walmart is so dominant while almost every other retailer in America sucks (animal) (appendage). It's about reducing excess inventory. Too many places hold inventory for too long until the depreciation really starts eating into the margins. There are numerous (holiday) sales throughout the year, but Walmart is the only one that understands that everyday low prices means things going out the store every day.

Back to the topic of the cost of food, there'd been talk at work about inflation possibilities in the near future and how hard it is to understand the huge drop in food prices over the recent months. My theory is that of the recent months and even in the near future, the shift is not one of total demand but rather the distribution of demand. Economists like to talk in real terms. But for this case, I believe it is correct to look at the nominal numbers. If developing nations used to spending $2/day on food are now spending $4/day on food, that seems like a huge increase. But in comparison, the developed nations are spending $15/day on food and throwing away $5 of it (all numbers are hypothetical). So now with the economic crisis, these developed nations are spending $10/day on food and eating the whole $10 worth. So while it seems like inflation is inevitable as developing countries are spending more and more on food, I think in the near term, the numbers still even out and aren't as drastic as some people think.

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