The ROI of Going Out To Lunch

Is going out to lunch worth the money?

Is going out to lunch worth the money?

You can't save your way to success. – Dave Shaw, CEO BlackPoint Group, Founder of IDEXX Labratories”

Ever since I made my way into the working world, the biggest decision I face in the morning is one that faces all of us – should I pack lunch or buy lunch? The analysis is nearly paralyzing, weighing the pros and cons of food choice, transportation and storage, marginal utility of consumption, and most obviously, cost. As an single entrepreneur, this decision is of utmost importance, as I value nothing more than my time and comparative advantage. Similarly, as a data loving geek, I figured I should see how the numbers looked. I spent 3 weeks cataloging all my moves and writing down exactly how much time each part of the process took. Here's what I did.

The Cost Breakdown of Lunch

My first step was to determine costs. Based on the assumptions of my decision making, I knew that this could not be done simply by adding up the costs in the grocery store – my time and enjoyment is literally worth something. I'll do my two most popular choices for a packed lunch, PBJ and Chicken Salad, and the average cost of a comparable sandwich in Portland, ME.

PBJ – $1.60/lunch
1 jar organic, natural  crunchy peanut butter (Trader Joe's) – $2.99
1 jar jelly (Trader Joe's) – $1.99
1 loaf whole wheat bread (Trade Joe's) – $2.99

Assuming this is a 5 day supply – total cost – $7.97 – $1.60 per lunch

Chicken Salad – $3.89 per lunch
2 pounds chicken breast, boneless and skinless (Whole Foods) – $9.00
1 jar mayonaisse (TJ's) – $1.99
1 bag celery (Whole Foods) – $2.49
1small bag walnuts (TJ's) – $2.99
1 loaf whole wheat bread (Trade Joe's) – $2.99

5 day supply – total cost – $19.46 – $3.89 per lunch

Turkey or Chicken Wrap – $7.33 per lunch
Local sandwich or salad (avg. price aggregated across 5 shops) – $7.33 per lunch

On a purely revenue standpoint – bringing a PBJ is going to win every time. But we all know that's not realistic – nutrition, variety, etc, all play a role. So – how do these variables affect the equation?

Time Is Money

Let's assume your hourly rate is $60/hr so that the math is easy. That means every minute you spend thinking about and preparing your lunch costs you $1. The average time it took me to prepare a home lunch ranged from 2 minutes to 4 minutes, start to finish. That adds an average of $3 to my baseline cost. This saved me time, however, in terms of having to walk to a sandwich shop and wait in line, which averaged 19 minutes when walking, purchasing, and bringing back to my office to eat.

Costs Incurred from the time spent:
Preparing at home – 3 minutes – $3
Walking to get a sandwich – 19 minutes – $19

Real Men Eat At Their Desk

At some point, corporate life celebrated eating at your desk as some sort of checklist for working hard. From an ROI perspective, this is true. Fortunately, people are not robots and that type of thinking has negative externalities. From my own 3-week testing and data collection (both working on-site and on my own time), I found the following:

Average time of lunch break when eating at desk –
6 minutes$6 cost
Average time when going out to lunch – 37 minutes (including the 19 above) – $37 cost

That's a $31 swing in potential costs. If you are pinching pennies, make a PBJ, slam it at your desk, and go heads down for the rest of day regardless of how your body feels. You may be miserable, but at least you'll save the cash.

Gray Area  #1 – Nutrition

There is no doubt that variety in your food will lead to improved energy levels, assuming the variety is of quality food. That being said, the PBJ at the desk decision may be good in the short term, but may hurt your long term ability to power through the day. By missing out on key nutrients at your lunch break, your body may have a hard time with the 3-4 pm crash, possibly leading to buying coffee or a sweet baked good. When I did my test, I found:

PBJ after 1 week leads to an average loss of 12% energy for 2 hours
Chicken Salad after 1 week leads to an average energy loss of 5% for 2 hours
Purchased vegetable rich sandwich or salad – no change

Dollar Amounts
PBJ – 12% of $60 = $67/hr for 2 hours – $14 decrease in productivity ($14 cost)
Chicken Salad – 10% of $60 = $66/hr for 2 hours – $12 decrease in productivity ($12 cost)
Purchased = No Change – $0 decrease in productivity ($0 cost)

Yes, you could buy your own vegetables and put them in your salad, but that would drastically change your costs. This is a hard area to prove because of body types and responses to nutritional deficiencies, but that's how the data came in for me.

Gray Area #2 – Marginal Utility

This is definitely a gray area and probably the biggest decision maker for most of the people out there who struggle with the lunch decision. Going out to lunch is fun, making your lunch isn't. That's a full sliding scale, but the idea remains the same – baked into that cost of the purchased lunch is the price you are willing to pay for someone else to make it and the value you put on the experience.

How does this marginal utility translate into a hard cost? I measured my overall feeling of well being (doing my best to control for other factors) for the two hours following lunch. This is the period when I reflect on my decision to go out to lunch (consciously and subconsciously) and reap the benefits of eating something new and delicious. I gave this a score of a percentage that my mood was raised over baseline (pre-lunch) and then translated that into the amount my productivity would be raised, as measured by the same percentage increase in an hourly rate. I did not drink coffee once during this 3 week trial for 2.5 hours before lunch to control for the mood lifting effects of caffeine.

PBJ – 7% increase (note: this was a physical reaction to the sugars and glycemic index more than the decision, which I rolled into the final percentage I awarded)
Chicken Salad – 9% increase
Going Out – 18% increase

Dollar Amounts
PBJ – 7% of $60 = $64/hr for 2 hours – $8 increase in productivity
Chicken Salad – 9% of $60/hr = $65/hr for 2 hours – $10 increase in productivity
Going Out – 18% of $60/hr = $71/hr for 2 hours = $22 increase in productivity

Networks Make Money

This is easily the biggest game changer to the entire model I built – the value of seeing people you know when you walk to and eat your lunch. This could be potential clients, current clients, and business associates, all of which add value to your day. During the days I went out to lunch, the following happened:

  • I saw an old client I had who reminded me that he needed another round of PPC management
  • I saw the guy who manages my SEP IRA and reminded me to make a deposit
  • I gave out 4 business cards

What did that do? It blew the entire revenue model of making lunch out of the water. The PPC contract paid for 3 months of lunches and the SEP IRA deposit saved me over $1,000 in taxes next year. The business cards will potentially lead to another client.

Clearly, this is just an effect of being in public, so you could bring your home made lunch and accomplish the same thing. My only caveat on that front is personal – I think there is a lot to be said for “looking professional” and successful people who go out during their lunch break tend to buy their lunch, because they like spending money. By that token, one of the best ways to attract new clients is to show them that you are like them. I can't necessarily prove this with data, but it's been a common trend I've seen with successful entrepreneurs.

Think Opportunity, Not Cost

When we roll up all these costs, here are the dollar amounts I attributed for each decision:

PBJ (eat at desk) – $16.60/day
Chicken Salad (eat at desk) – $14.89
Going out to eat a sandwich – $22.33

These numbers are HIGHLY subjective because I attribute weight to marginal utility and overall productivity to going out to new places and eating healthy food, but the point remains the same – the long term effects of trying to skimp on the fuel for your body will not necessarily pay off.

What's also interesting is that, for me, bringing PBJ actually isn't the best choice for money. The quickness and simplicity of the sandwich actually hurts my productivity level, which offsets the cost. Remember that with economies of scale, the raw costs of good diminish in relation to your own value. In other words, how your lunch break makes you feel affects your productivity which dwarfs the cost of the lunch.

The best solution would be if you could get very cheap vegetables (your own garden?) and bring those to work and then determine if you should be leaving to eat it or not. This breakdown is very specific to those of us who do not work for a company and can value our hours as such, but the potential upsides of networking are always prevalent.

The bottom line:

If you want to save money, plain and simple, bring a solid sandwich (more substantial than PBJ) to work and eat it at your desk. This will be better for your 5 hours of productivity than PBJ and will pay off long term.

If you want to use your lunch hour as an opportunity to make more money, go out to eat where you know you'll see potential clients.

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