When Purchasing Food or Drink, are You Paying for a Name?

by Matt B

Gordon Ramsey foodIt is no secret that when purchasing clothing, often times you are paying for a name. If you actually do the math, you will realize that there is no possible way that Prada bag cost $450 to make. The actual figure (if you calculate payroll, design and material) is probably a lot closer to around $50. Unfortunately, the same rules apply to the food and beverages we consume, and we may not even realize how much we pay for name alone.

Store Brands

I’m a huge advocate of purchasing store brands on many items throughout the store. If you were to conduct a blind taste test at home, I’m willing to bet you would not notice any difference between the major label and the store brand. Hell, you may even end up liking the store brand better! Most “frugal” households have a stockpile of off-brand foods in the kitchen, and as an off-brand purchaser myself I can tell you that we are not missing anything.


Who doesn’t love a good cup of Starbucks coffee? I know I do. Even so, how much of that $3.00 latte is profit? How much of the decor and store maintenance are factored into your brew? I know that these questions are the last thing on your mind when you stroll into Starbucks, but it’s your wallet they are profiting from. I hate to pick on Starbucks, because it seems like everyone else does. But it is hard to leave them alone when they seem to pop up on every third corner in any given town.

Economicshelp.org-Economy of a cup of coffee

Economicshelp.org-Economy of a cup of coffee

Of all of these ingredients and factors, coffee covers the smallest percentage of the purchase price at 2%.

In this study, the quality of a cup of coffee is compared from the “big three”. That is Starbucks, McDonalds, and Dunkin Donuts. The result? While all three fall short on taste (by my standards) the best is Dunkin Donuts. Ranked on taste, consistency, presentation and process, the cumulative scores are unimpressive…telling me that convenience is a pretty sizely piece of the price tag.

How Good is Your Palette?

When you go out to eat, what are you paying for? You can probably make a similar meal at home for less than half the price. So is it Environment? Service? Convenience?

I’m not telling you to avoid dining out. I just want to bring to your attention that you may be grossly overpaying for what you are getting. If you can not tell the difference between the 5 star restaurant that will cost you $65 per diner and the “casual dining” restaurant that will cost you $20 per diner, what are you paying for? And why would you go to the 5 star eatery?

The Dollar Menu

Many fast food joints have dollar menus. We tend to eat a lot of fast food (bad, I know) and sometimes it is actually cheaper to grab a bite from the drive-thru than to make one at home. My biggest issue is the long term cost. It is well known that this food is unhealthy for you, which begs the question…How much will frequent fast-food dining affect my health care costs in the future? It is an unanswerable question, but one to consider when you want the convenience of a burger or a taco compared to the more health-conscience decision to eat at home.

Watch Your Wallet

The next time you are out looking for a cup of joe or a decent meal, consider what you are paying for and whether it is worth it…both in the short and long term. You may well end up saving your money or even your life.

Photo: Nick J Webb

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Colleen August 19, 2009 at 9:29 am

While I don’t disagree with your overall analysis, and I am not a particular fan of Starbucks (over-roasted for my taste), you fail to take into account that one reason the coffee is more expensive is that Starbucks pays better than fast food and offers benefits and such for its employees in many cases.

And I consider that to be part of what I’m paying for — a living wage.

Matt B August 19, 2009 at 10:29 am

While I do agree with you about the wages, the quality of Starbucks in the study I linked to was actually less than that of Dunkin Donuts and McDonalds.

I am all for people making a decent wage, but the quality issue is inexcusable when you pay that much for coffee.

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