March 1, 2012

Don't Be a Cheapskate While Dining Out

If you frequent personal finance blogs like I do, you come across tons of great advice on what to do with your money.  You learn how to get more of it, how to save it, how to spend it and how not to spend it.  Much of the advice for saving money revolves around frugality, and many sites are dedicated to solely that, being frugal.  There is nothing wrong with being frugal, and saving money to improve your personal finance situation is a good thing.  But, when it comes to eating out, I have to respectfully disagree with most of the frugal advice.  In fact, I would go so far as to say that frugality while dining out is a contributing factor to some of the bad economic times.  That’s right!  You cheapskates may have helped cause the recession by ordering water and eating off the kids menu.

Eat Frugally and Put Your Favorite Restaurant Out of Business

You really don’t have to be a genius to figure out how to save money while eating at a restaurant.  It's not secret insider information.  There are tons of blog posts, like this one from The Frugal Toad, on how to save money while eating out.  If you only worry about how your finances are affected, then this type of advice is for you.  Order from the lunch menu (or kids menu if they’ll let you).  Drink water.  Skip dessert.  Use coupons and sign up for discount programs.

OK, great.  You filled your belly, but not necessarily with what you wanted to eat.  You settled for water, but that ice-cold cola beverage sure would have gone great with those fries.  A beer or a glass of wine would have been the perfect way to take the edge off after the day that you just endured.  Unfortunately, you’re too cheap for that.  Many of these "unnecessary" items have huge mark-ups as explained in this post over at Daily Finance.  So what!  Restaurant owners and staff need to make a living too.

The restaurants are not there as a courtesy to their customers.  Restaurants are there to make a profit.  If everybody followed frugal advice when it comes to eating out, you would quickly see all of your favorite eating establishments driven right out of business.  Luckily, there is 0% chance that you will ever get everybody to do anything.  In fact, I would dare say that frugal diners are the minority.  This is good, because I prefer that my favorite restaurants stay in business so that I can still eat there when I choose to.

Contrary to what you might think, the profit margin on food in restaurants really isn’t that high.  I found this great post which breaks down all the costs involved with a typical burger at a restaurant.  According to it, the profit margin is only 5%.  Even with higher profit margins on things like drinks and desserts, restaurant owners are probably not making as big a killing as you might think.  With the ever-competitive market, restaurants are finding the need to offer ridiculous deals in attempt to entice customers to dine at their establishment.  It is hard enough for a restaurant to be successful without having to deal with stingy customers.

Your Waitress Works Harder Than You Do
If you’re going to sit at a table for an hour in a nice restaurant and drink water and order the cheapest meal, at least have the courtesy to leave your server a nice tip.  They work very hard for their money.  They’re on their feet for the entire shift.  They work nights and weekends.  They put up with rude and grouchy customers.  They attend to your every need while you dine in their restaurant.  Your server could be somebody who is working their way through college.  Or maybe it’s a single mother who is struggling to get by.  It might be a high school student who barely earns enough in tips to pay for gas and insurance on their hand-me-down car from their parents.  These people are the backbone of the restaurant industry, and they rely on tips for the majority of their pay.  They deserve to be rewarded for their hard work.

If you’re one of these frugal diners and tip only 15% of your measly bill, you’re no better than somebody who doesn’t leave a tip at all!  As long as the service is acceptable, you should tip at least 15 or 20% of what your bill would have been if you had ordered an average meal.  Here’s another tip:  if you use a coupon, tip on the amount that the food was supposed to cost.  For example, if you have a buy one get one free coupon, tip on the amount that both entrees would have cost.

Don’t Be a Selfish Cheapskate
Yeah, you heard right.  You are selfish if you only think about your own finances when considering what to order at a restaurant.  You have to keep in mind that your decision has an affect on many more people than just yourself.  

  • The waitress gets stiffed on a tip so you can save a few bucks.  Now she can’t afford to buy that outfit from Target that she’s had her eye on.  Target’s sales suffer.  They miss their quarterly estimates and their stock price drops.  Stock holders suffer.  Everybody loses.
  • Too many customers start taking advantage of frugal dining tips, which starts to affect the bottom line at a restaurant.  The manager is forced to lay off bus boys, forcing the waitresses to bus their own tables.  They now work twice as hard for less pay.  The bus boy now has to ride the bus to school because he can’t afford gas for his car.  The oil industry suffers as a result, as does the local mechanic who would have been working on that car when it breaks down.
  • Customers become dissatisfied with the service at the restaurant as a result of the bus boys getting laid off.  The waitresses are too busy and can not give customers the proper amount of attention to keep them happy.  Customers stop going to the restaurant.  It is forced to close.  Now not only the bus boys, but the management, cooks, dishwashers and waitresses are all out of a job.  This puts a strain on the unemployment system which is funded by... guess who.  You!  

Coming Full Circle in Conclusion
It’s called unintended consequences.  Obviously, what I’ve laid out here doesn’t generally happen.  The point is, that if everybody followed the frugal dining advice, this could actually happen.  Thankfully, everybody doesn’t.  But, by doing so you are playing a small part in contributing to the demise of the economy.  My advice is, if you really want to be frugal and save money, don’t eat out!  Or, eat out less.  Or take my advice about picturing what your food will look like when it comes out the other end. When you do decide to dine at your favorite eating and drinking establishment, don’t be a cheapskate!  Live it up.  Eat and drink what you want, and be generous with your money.  You only live once.  After all, you’re not visiting that restaurant to save money.  You’re there for the great food, delicious drinks and wonderful dining atmosphere.  Don’t be a burden on society.  Get the good stuff.  In the end, it will all come full circle.  The economy will flourish as a result.  You will get a raise at work, or a promotion, or even find a better job.  The stock market will explode and your 401k balance will skyrocket.  All because you chose not to be a cheapskate when you went out to eat.


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