Prices in New York

[Fat Guy]

A restaurant that was charging $20.01 for a meal in 2001 and is charging $24.07 for the same meal now has certainly raised its prices. However, if a restaurant was charging more than $24.07 for lunch in 2001 and is now offering a $24.07 lunch special year-round, its prices have come down. My impression is that there are a number of restaurants that used to participate perhaps only in the Restaurant Week promotion, or not even, but that now offer $24.07 or $24 lunches year round. Overall there has been a lot of downward pricing pressure on lunch.

[weinoo]

In 2005, the Zagat Survey reported the average cost of a meal was $37.45.

In the 2008 survey, the reported average cost of a meal is $39.46. That's an increase of 5.4%. Since 2005.

Where are they getting the figure of a .97% rise, since 9/11, quoted in the WSJ article? Perhaps they mean 9/11/2006?

I'd offer that their figures are "hardly compelling."

And, anecdotally, my wife and I eat (dinner) out an average of 4 - 5 times a week. If the average cost of any of our meals has only gone up $.03 since last year, I would be a happy person (instead of the miserable bastard that I am). And I'd have more money to spend on other indulgences. Like $12 - $15 cocktails. Or $12 glasses of shitty house wine. But I'd guess that the average price of our meals has gone up around 10%. Since last year. Even when I order in inexpensive Chinese or Vietnamese.

These all sound like figures those in the industry want us to believe - sort of like telling us that our economy is in fine shape - even though the price of oil is approaching $90/bbl (up almost 50% in the last year) and milk is about $4 a gallon.

[Fat Guy]

What possible stake could the industry have in denying that there's inflation? If anything, the industry would want to say there's tons of inflation, and therefore they need to charge more to keep pace with it. The Zagats, in their article, don't deny that there's inflation. They're simply pointing out that their average meal cost statistics aren't matching up to inflation, and they speculate about why that might be so.

They're not saying 0.97% since 9/11, they're saying an average rate of 0.97% since 9/11. In a six-year period, an average rate of 0.97% totals up to much more than 0.97%, however they're saying it represents 1/3 of the CPI, meaning that average meal costs are going up much less than inflation. A given individual's average meal costs may be going up more, however the Zagats are looking at a much larger pool of data. While I'd be eager to dismiss those statistics if given a good reason, I haven't heard one yet.

[Miami Danny]

In 2005, the Zagat Survey reported the average cost of a meal was $37.45.

In the 2008 survey, the reported average cost of a meal is $39.46. That's an increase of 5.4%. Since 2005.

Where are they getting the figure of a .97% rise, since 9/11, quoted in the WSJ article? Perhaps they mean 9/11/2006?

I'd offer that their figures are "hardly compelling."

And, anecdotally, my wife and I eat (dinner) out an average of 4 - 5 times a week. If the average cost of any of our meals has only gone up $.03 since last year, I would be a happy person (instead of the miserable bastard that I am).  And I'd have more money to spend on other indulgences. Like $12 - $15 cocktails. Or $12 glasses of shitty house wine.  But I'd guess that the average price of our meals has gone up around 10%. Since last year. Even when I order in inexpensive Chinese or Vietnamese.

These all sound like figures those in the industry want us to believe - sort of like telling us that our economy is in fine shape - even though the price of oil is approaching $90/bbl (up almost 50% in the last year) and milk is about $4 a gallon.

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Whatever the actual rise in prices may be, it still seems to be pretty low. But in any event, other than the Zagat's, what supposedly scientific evidence is there to refute them? And I think that even if you take the Zagat's evidence as anecdotal and not scientific, that's still a helluva lot of anecdotal evidence.

[Nathan]

that Zagat article was roundly pilloried in the press for "fuzzy math"...basically all that it proved is that either a. Zagat voters don't eat at the restaurants they claim to...or b. they have enormously faulty memories (probably both)...in some cases the purported average check was less than the cheapest dining option at a given restaurant!!!!

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Nathan, do you have any links to those articles? I'd like to check them out.

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here's one:

http://www.nypost.com/seven/10112006/enter...teve_cuozzo.htm

and he generally slams Zagat here:

http://www.nypost.com/seven/10102007/news/...books__stuf.htm

Edited October 19, 2007 by Nathan (log)

[Fat Guy]

Neither of those citations appears to be a response to the Wall Street Journal article.

[weinoo]

In 2005, the Zagat Survey reported the average cost of a meal was $37.45.

In the 2008 survey, the reported average cost of a meal is $39.46. That's an increase of 5.4%. Since 2005.

They're not saying 0.97% since 9/11, they're saying an average rate of 0.97% since 9/11.

Zagat's reportedly states an average of .97% a year - though I never see the word average appear in the quote from the WSJ.

Even assuming an average, the 5.4% actual figure disputes that.

And, imo, the stake the industry has in denying inflation is that it will keep people going out to eat - people think they have the same buying power they did 3 years ago, and that the prices in restaurants seem to actually be lower, they're more apt to continue dining out at their favorite places.

Additionally, most of the responders posting in this post seem to agree that the cost of their meals has gone up - substantially. I like to think eGulleteers are a little more reliable in their opinions of restaurants and what they've spent in said restaurants than the average Zagat survey responder.

[Fat Guy]

Zagat's reportedly states an average of .97% a year - though I never see the word average appear in the quote from the WSJ.

The news release linked to above specifies "NYC's annual dining inflation averaging 0.97% since 9/11." This figure is repeated in the Journal piece as "Overall, the rate of inflation in New York City dining costs has been just 0.97% since 9/11 -- barely a third of the Consumer Price Index." The "rate of inflation" means the annual rate, not the change for the entire six-year period.

Even assuming an average, the 5.4% actual figure disputes that.

It doesn't dispute anything. We would need to know the numbers for each year since 2001. Somebody who has the Zagat surveys for the past six years should be able to dig out those figures and list them.

And, imo, the stake the industry has in denying inflation is that it will keep people going out to eat - people think they have the same buying power they did 3 years ago, and that the prices in restaurants seem to actually be lower, they're more apt to continue dining out at their favorite places.

This theory depends on a number of unproven assumptions: 1- that the Zagats are shills for the industry (I submit they are more aligned with the consumer and would have no issue with calling "inflation" if their numbers demonstrated it), 2- that the industry is making false anti-inflationary claims (I have not seen any examples of such), 3- that people would dine out less if they thought prices were rising (unsubstantiated -- they may just change ordering behavior, or go to different restaurants), 4- that the Zagats are talking about same-restaurant figures (when they are explicitly saying that many same-restaurant figures are up but that newcomers and other forces are holding overall prices down).

Additionally, most of the responders posting in this post seem to agree that the cost of their meals has gone up - substantially. I like to think eGulleteers are a little more reliable in their opinions of restaurants and what they've spent in said restaurants than the average Zagat survey responder.

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They're reliable but atypical. The people posting here are most likely dining at exactly the restaurants where prices are rising: the most highly acclaimed, successful places that would be on a natural upward pricing curve at any time, whether or not we had inflation in the economy overall. The people responding to the Zagat survey are on the whole much better representatives of the lowest common denominator than the people posting here (although they too are dining at the "best in class" level more than average people). Asking members of the eGullet Society about their dining habits and extrapolating that to an average is like asking a group of university professors about their educations and then arguing that the population is really smart.

[Miami Danny]

that Zagat article was roundly pilloried in the press for "fuzzy math"...basically all that it proved is that either a. Zagat voters don't eat at the restaurants they claim to...or b. they have enormously faulty memories (probably both)...in some cases the purported average check was less than the cheapest dining option at a given restaurant!!!!

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Nathan, do you have any links to those articles? I'd like to check them out.

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here's one:

http://www.nypost.com/seven/10112006/enter...teve_cuozzo.htm

and he generally slams Zagat here:

http://www.nypost.com/seven/10102007/news/...books__stuf.htm

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I'm sorry-if Cuozzo's all you got, I don't think that counts as 'roundly pilloried'.

[Nathan]

Grub Street, Eater.

but anyway...the point is merely that the Zagat survey is completely unreliable (for obvious reasons!!!!!).

for frick's sake, they report average checks at some restaurants that are literally impossible....

[Fat Guy]

What I see on Grub Street is just an annotated link to Steve Cuozzo's story in the New York Post, which I don't believe responds to the Wall Street Journal story. Maybe there's something else on Grub Street, or on Eater, but you haven't provided any links and I haven't found anything. So I think, for now, the claim "that Zagat article was roundly pilloried in the press" remains unsubstantiated, save for one entry on a finance blog -- if that even counts. The Zagats have no greater detractor than yours truly, however it's important that we get our facts straight.

It has certainly been clear to me for years that the Zagat survey participants underestimate how much they spend in restaurants. The first time I challenged the accuracy of such estimates was in 1998, when I refuted the $76 claim for dinner at Lespinasse. But there's no reason to think there's more underestimating going on now than in 1998. As long as the underestimation is constant, the information with respect to changing prices is no less valid.

I think fundamentally there may be a nomenclature problem here. The Zagats have never disputed that there's inflation. They have never disputed that some restaurants are raising their prices. What they've posited is that average meal prices have not risen. In other words, many people are spending their money differently -- such as at "a slew of inexpensive newcomers" -- rather than spending more. That position is entirely consistent with the claim that there's inflation: getting less for the same amount of money is just as much a sign of inflation as spending more for the same thing.

[Nathan]

I can agree with that.

(It was also sloppy of me to say that it was the "Zagat article" that was being responded too...it's the Zagat survey results that have been criticized.)

[weinoo]

Me too.

What I can also say is that at every single place I eat at, be it at the cheap Vietnamese or Chinese, on up to 1, 2, and (occasionally) 3 star place, prices have gone up over the past 1 -2 years by 10 - 20 %.

What was a $3.25 bowl of soup noodles is now $3.75.

What was a $50 meal for two is now $55 - $60.

What was a $100 meal for two is now $110 - $120.

Etc.

[Miami Danny]

Me too.

What I can also say is that at every single place I eat at, be it at the cheap Vietnamese or Chinese, on up to 1, 2, and (occasionally) 3 star place, prices have gone up over the past 1 -2 years by 10 - 20 %.

What was a $3.25 bowl of soup noodles is now $3.75.

What was a $50 meal for two is now $55 - $60.

What was a $100 meal for two is now $110 - $120.

Etc.

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So in the end we all seem to be agreeing that restaurant prices have gone up substantially, but that the average 'price of a meal' has not. This does not seem to be possible, without either patrons ordering less food at the same restaurants, or patrons eating a significant number of extremely low-priced meals at the so-called 'slew of inexpensive newcomers' whose prices are significantly lower than last year's slew of inexpensive newcomers. How else to explain an annual rise of near-insignificance for the past five or six years? Are the Zagat's saying that every single year , prices go up a lot at some restaurants, but the 'average' price barely moves because a 'slew' of cheap new places open to offset the older places whose prices are jumping so high? That's got to be a pretty big slew , ladies and gentleman. And I'm not an expert here, but don't a fairly large number (perhaps not large enough to be called a 'slew') of expensive restaurants also open every year? Or is it, say, eight expensive new spots, and a thousand cheapo burrito joints? (There are 50 Chipotle's in NYC-are THEY part of the 'slew'?)

The whole thing smells. I'm not saying, and I don't think anyone is (I could be wrong), that there is reason to challenge the Zagat's integrity. Their methodolgy, however, is quite suspect. Until one knows exactly how they reached their conclusions (and most of this info is proprietary), I can't see how one can take their findings seriously.

Edited October 20, 2007 by Miami Danny (log)

[ghostrider]

What the Zagats actually say, as FG noted, is:

Overall, the rate of inflation in New York City dining costs has been risen just 0.97% since 9/11 -- barely a third of the Consumer Price Index.

(And yes, that "has been risen" got by the WSJ copy editors, showing that the Zagats are as adept with fuzzy English as they are with fuzzy math.)

What this statement means to me, taking them literally, is that, if the annual rate of inflation of NYC dining costs were 3% on 9/11/01, it's now 3.0921%.

It also means that the rate of inflation of the CPI has changed by c. .32% - e.g., if the annual rate of change in the CPI were 3% on 9/11/01, it's now 3.0096%, hardly a significant difference.

Of course, the rate of inflation in the cost of NYC dining could be 5% and the rate for the CPI could be 2%. The Zagats tell us nothing about that. They seem interested chiefly in spouting verbiage that they hope won't be examined too closely and obfuscating any serious inquiry into their data and methodology.

[Fat Guy]

That's not what they meant. Have a look at the press release that I keep referencing. They unambiguously refer to "NYC's annual dining inflation averaging 0.97% since 9/11." A look at the whole quote should eliminate any doubts about what exactly the Zagats are arguing:

While overall restaurant prices in NYC remain the highest in the U.S. at $39.46 per dinner, that's only three cents higher than last year. This is consistent with NYC's annual dining inflation averaging 0.97% since 9/11. Credit for keeping the average cost steady goes to a slew of inexpensive newcomers and to the 697 restaurants in this year's guide that offer dinner for under $30. However, inflationary trends look quite different at the city's 20 most expensive restaurants where an average meal now runs $143.06. Since 2001, dinner prices at the city's elite have soared at an average of 11.6% per year, from $84.45 to $143.06.

[Fat Guy]

So in the end we all seem to be agreeing that restaurant prices have gone up substantially, but that the average 'price of a meal' has not.  This does not seem to be possible, without either patrons ordering less food at the same restaurants, or patrons eating a significant number of extremely low-priced meals at the so-called 'slew of inexpensive newcomers' whose prices are significantly lower than last year's slew of inexpensive newcomers.  How else to explain an annual rise of near-insignificance for the past five or six years?  Are the Zagat's saying that every single year , prices go up a lot at some restaurants, but the 'average' price barely moves because a 'slew' of cheap new places open to offset the older places whose prices are jumping so high? That's got to be a pretty big slew , ladies and gentleman.  And I'm not an expert here, but don't a fairly large number (perhaps not large enough to be called a 'slew') of expensive restaurants also open every year?  Or is it, say, eight expensive new spots, and a thousand cheapo burrito joints?  (There are 50 Chipotle's in NYC-are THEY part of the 'slew'?)

The whole thing smells.  I'm not saying, and I don't think anyone is (I could be wrong), that there is reason to challenge the Zagat's  integrity.  Their methodolgy, however, is quite suspect.  Until one knows exactly how they reached their conclusions (and most of this info is proprietary), I can't see how one can take their findings seriously.

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I don't think the methodology here is complex or mysterious. The Zagats are taking the self-reported data from their survey participants and generating an average meal price. The answer they're getting is that the average meal price isn't going up very much. This can mean one of two things: 1- the data are wrong, or 2- the data are right. If the data are right, we have to look at why.

If I had to speculate, I'd say the Zagats' argument is true but incomplete. I think, if the data are right, it can only mean that most people simply aren't willing to spend more money per year on dining out, and they're equally unwilling to dine out less -- that they're basically at a plateau of spending, for example, $10,000 a year for 100 meals out (a <1% average annual increase for 6 years would typically be a plateau, though that average could result from peaks and valleys too). Needless to say, most people aren't consciously projecting it at this level of specificity, however if the Zagats' figures are correct then this would seem to be what a lot of people are doing.

If the Zagats' figures are correct, it would also explain in part the lack of fine-dining restaurant openings right now. It would mean the market has anticipated this change in consumer behavior and is therefore not supporting new high-end openings with very expensive prix-fixe menus.

[Fat Guy]

I stopped getting Zagat surveys several years ago but have a 2004 copy that I got for free at a corporate event. Maybe others have the missing editions between 2001 and now so we can put together a list of average price claims. For 2004 they claimed "a .3% increase to $37.06 from $36.95."

Also, on the issue of the relationship between the Zagats and the industry, I noticed that in the 2004 introduction they defend the smoking ban. That's not exactly what I'd call an industry position.

[Miami Danny]

"I don't think the methodology here is complex or mysterious. The Zagats are taking the self-reported data from their survey participants and generating an average meal price."

My post does not say 'mysterious or complex-it says 'suspect'. I think it would be correct to say, as I actually stated in my previous post, that the Zagat's claim to be taking the 'self-reported data', etc, etc. They do not release any data, there are no raw numbers out there at all. In fact, it is widely known that editors all over the country add and subtract restaurants at the Zagat's behest, or some might say, whim. That is, restaurants that never make the grade, or perhaps are not even mentioned (!) by the so-called 'survey participants'. To say that this is not mysterious or complex, does not alter the fact that it is, in fact, suspect , as I said, and calls into question their conclusions. Whether they are pro- or anti-industry is irelevant. Their dog in this hunt is the Zagats. Period.

[Fat Guy]

Apples and oranges. Whatever the Zagats do to enhance the standing of restaurants they like has no bearing on a basic cost average figure like the one we're discussing here.

[Miami Danny]

Apples and oranges. Whatever the Zagats do to enhance the standing of restaurants they like has no bearing on a basic cost average figure like the one we're discussing here.

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I was using the example of statistical massaging (a well-documented fact), and the listing of restaurants that have never been rated by actual surveyors (other than, say, one hand-picked editor), as part of my contention that the Zagat's methods are far from scientific, and therefore, suspect. To quote a figure from them as though it were a proven fact is misleading to say the least. The 'basic cost average figure' we're discussing here, has no basis in reliable, proven, numbers. They have already admitted that some of their figures are outdated-in fact they claim that some figures were not updated since April-so why give them any credibilty at all? Until I see raw, scientifically gathered evidence, all of their numbers are questionable. I'm not saying they don't make for a good bedtime read, but so does Nobel Prize-winning author Doris Lessing's The Golden Notebook, and they are both pretty much fiction.

[Fat Guy]

It's an absurd leap to go from statistical massaging of a few individual restaurants' ratings to the conclusion that all numbers presented by the Zagats are no more reliable than fiction. Again, it doesn't even matter if the numbers are off by some margin, so long as that margin remains steady. Nobody cares if the average meal cost is $39 or $49. What we care about is the year-to-year change. Nobody has demonstrated motive for the Zagats to fudge these particular numbers, nobody has provided even a hint of alternate citywide data, and so I believe they are the most reliable information anybody has introduced regarding year-to-year pricing trends in the sample group.

[Miami Danny]

It's an absurd leap to go from statistical massaging of a few individual restaurants' ratings to the conclusion that all numbers presented by the Zagats are no more reliable than fiction. Again, it doesn't even matter if the numbers are off by some margin, so long as that margin remains steady. Nobody cares if the average meal cost is $39 or $49. What we care about is the year-to-year change. Nobody has demonstrated motive for the Zagats to fudge these particular numbers, nobody has provided even a hint of alternate citywide data, and so I believe they are the most reliable information anybody has introduced regarding year-to-year pricing trends in the sample group.

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It might be a leap, albeit perhaps not an absurd one, to say that three or four restaurants have their statistics massaged, therefore everything the Zagats ever do is suspect. But it is not an absurd leap, nor even a hop, skip, and a jump, to examine the well-known fact that ALL of the statistics are revised and interpreted, in secret, by the Zagats themselves, and then come to the conclusion that the Zagats have no real, empirical data. All of the so-called statistics (which are, as we have seen, spottily, if at all, fact-checked), in Zagat's guides are revised and remade by the editors and the Zagat's themselves at their whim. The fact that they may be the only ones publishing this so-called data, does not mean that it is therefore irrefutable. And no one needs to prove that the Zagats have any 'motive' to 'fudge' figures. That is irrelevant to this discussion. I am in no way impugning their integrity; but simply stating that their figures, based on what we know, and what they have admitted, are unscientific and unreliable. Are they the best at what they do? Also irrelevant. And if they are the most reliable, it is only because we seem to be examining a set of one.

Edited October 21, 2007 by Miami Danny (log)

[Miami Danny]

Additionally, one can not conclude from their unreliable data, that their unreliable data is unreliable in the same way, every year, therefore at least it is reliable in its own set. If they can be off-base one year, they are not going to be off-base in the same exact way every year. So the year-to-year data is also highly suspect. Their 'sample' group is also not a scientific sample, therefore it, too, could change dramatically from year to year, also skewing the numbers, great and small. And I think everyone cares what the average meal cost is, and my contention is that the Zagats are not providing that number reliably, consistently, or scientifically.

Edited October 21, 2007 by Miami Danny (log)

[Fat Guy]

To go from specific challenges to a blanket dismissal of all statistics collected by the Zagats is untenable. This all-or-nothing view of the reliability of statistics is unrealistic. When you have a large sample size and you're seeing clear trends from year to year over a period of many years, that information is worth looking at, even if there are flaws in the data.