Neil_Oz

Recently an American Fodorite commented on high restaurant prices in Australia. So I got to wondering, and played a little game. I picked a highly rated restaurant in Sydney (Marque) and another in San Francisco (Chez Panisse), and compared the price for a 3-course meal in each.

In accordance with local custom I allowed a 10% tip at Marque and 25% for tip and taxes at Chez Panisse. I tilted the comparison in Chez Panisse's favour by using their weekday set price of US$65 rather than Saturday night's $75, and the sum of the highest-priced courses at Marque (AU$89) rather than the lowest ($74). I used an exchange rate of AU$1 = US$0.76.

Now, not having patronised either I can't be entirely sure that I'm comparing apples with apples - I relied on reviews in the Sydney Morning Herald and Foodtourist.com (who gave them equal ratings) - so I'd welcome comment from anyone who has.

Also, I wasn't able to allow for wine prices. With those disclaimers the numbers came out as follows:

Marque: AU$97.90 (US$74.40)
Chez Panisse: US$81.25 (AU$106.91)

We could argue about relative purchasing power - i.e. whether AU$1 to an Australian at home means the same as US$1 to an American at home. If it does, Marque is 17% more expensive than Chez Panisse (bearing in mind that I've tilted the comparison in CP's favour). But to a visiting Australian who's earned his/her travel dollars in Australia, CP is 9% more costly, and to a visiting American who's earned his or her travel dollars in the US, CP is still more expensive (7%) than Marque. Note that wine hasn’t been allowed for.

Any budding economists out there are more than welcome to query my methodology, of course. Have I missed something?

ElendilPickle

I'd love to make an in-person comparison, but the cost of airfare from LAX to Sydney is not in my budget. ;-)

Lee Ann

Galah

The slide in the value of the US dollar has made Australia (and NZ and EU) much dearer for US visitors. It is not so long ago that they got two Au$ for each US$, now they get less than one and a half. It is this change that makes Australian prices seem high to Americans.

Australian restaurants are a great bargain compared with the rest of the world. You can eat more cheaply in the US, but better quality comes at a much higher price.

Tassietwister

It is cheaper in the US for day to day whatevers.

The US has a bigger rich and a bigger poor base, less middle class. And prices reflect that. If a business is in competition for those in the poorer class you get good price but if it is aimed toward the richer class you get very expensive stuff.

Hope this makes sense. In summary prices are set to what people will pay. Here our poorer are a bit richer so will pay more and our rich are a little poorer so will pay less.

But if a tourist is comparing prices downtown by Sydney Harbour they are paying maybe 4 times what we are paying because Australian business is far more exploitive of tourist than American business.

Maybe because Australian tourist has traditionally gone overseas for their holiday while Americans tend to holiday at home more keeping their tourism operators in check.

pat_woolford

I think, Galah, in fact I know that Americans along with everyone else in the world are aware of current monetary exchange rates. Yes, there was a year or two fairly recently where the US$ was worth twice ours, Americans saw the benefit, and why wouldn't they use it. Given reverse circumstances, I would too. But to say that Americans somehow think that old rate still applies, I think is insulting to Americans, to say the least.

Yes, have eaten in pretty high quality restaurants in US, not a big difference price-wise to some of our equivalent ones.

Tassietwister, agree that there's many a rip-off tour operator in Oz, usually the ones with funds to support mega-advertising OS and often delivering an inferior job. But there's many a hard working tour operator delivering a great product, I'm thinking right now of a small reef operator out of Cairns who only charges $99 pp for full day reef trip, after he pays up to 30% for agency booking, food, wages for crew, maintenance, reef permit, fuel, wear and tear on boat, etc the only cream he'll get there is for the bit extra for divers, and that's precious little.

pb_and_j

Actually Neil, you didn't include tax for the US restaurant. Tax varies and often liquor is taxed at a higher rate.
25% is really a rather large tip, I don't think that's average.

I think some of it is just seeing the higher numbers on the menu in Oz? For example the fish&chips in Sydney might be $15 and in SF $10. In Sydney you wouldn't tip, in SF you'd add tax+tip say about 25% and leave about 12.50. With the exchange you'd come ahead in Sydney but might still be alrmed at the higher menu price.

For the record, I thought Sydney prices were rather high, but a lot of that is from comparing to prices in the Cairns area which were much lower.

Neil_Oz

pb_and_j - what I allowed was "25% for tip and taxes". Not sure what California's tax rate is offhand, but I factored in 5%. As for the tip, I have the impression that many diners in the US will go to 20% if they're very happy with the service, or (less logically) eating in an upscale place, and Chez Panisse's serving staff got high marks in the review. So, 20% tip, 5% tax was my guess. I could have made it 15%, I guess.

Tipping is one of those hardy perennial subjects on Fodors, particularly on the Europe board as Americans try to come to terms with the correct protocol where restaurants include a "service charge". I don't blame them. What's the logic in applying a separate charge for "service"? After all, it's not as though you can decline the waiter's services and pick up your own meal from the kitchen, is it?

On the other hand, tipping protocol in the US can seem rather arcane for an Australian/NZ visitor who's not used to the idea that the staff need those tips to pay the rent. When you start factoring in cabbies, doormen, bellboys and anyone else who might get their hands on your bags, not to mention bar staff and hotel maids, it can seem like a minefield.

AS far as prices are concerned, our impression was that goods (things) tend to be significantly cheaper in the US, but when buying services the discrepancy wasn't as marked.

Having said all that, it would seem logical that most goods and services should be quite a bit cheaper in the US than Australia due to market size and economies of scale, not to mention lower wage costs for unskilled/semi-skilled labour.

Hard liquor and gasoline were two stand-out bargains when we visited some years ago. You have to go through a convoluted calculation to convert from AU$/litre to US$/(US) gallon, but when you do, these days it appears to me that the gap is closing somewhat.

lizF

You are right Neil the gap is closing somewhat. I saw a comparison done by one of the Newspapers which showed that in LA I think it was the cost now for a litre is equivalent to $1.05 cents Australian.
It is somewhat hard to make comparisons in the food industry because the last time I was there it would cost something like $20 Australian for a meal at Wendy's. That would be a main and a drink. Well I can get a similiar meal at say one of the Clubs here for about $7 Au which would be roughly the same quality. But many tourists who come to Australia do not know of our cheaper eating establishments and get caught out eating at the more expensive places.
Neither are they aware most of the time of our wonderful fish and chip shops which give the greatest bargains of all.
I think that we are now paying very little for some hand tools and things like that - I bought an angle grinder yesterday for $39. However on the other hand larger electricial equipment in the USA is quite a bit cheaper.
With the exception of Sydney our living costs are much less than the US - I would say half. We don't have local taxes that come anywhere close to theirs except here on Tamborine Mountain which has to have the dearest rubbish removal in Australia because that is ALL the council provides and for that I pay $2000 per year - A pox on them! However the tax structure is somewhat different in the two countries and they pay more in some areas and less in others.
I had a neighbour who was an American and he always used to say that he thought it worked out about the same overall - however that was quite a few years ago.
Also there is quite a marked difference between cities in the US too which also makes it hard to do a comparison.
Viva la difference!

Barbara_in_CT

As a budget traveler, I did a bit of choking when looking at the prices on lower end Australian menus. I would make a quick calculation of what I would pay for the meal in the US and then add tax and tip (in my head) and then add 1/3 to the result to get the Australian equivalent. I added the 1/3 based on the Aussie dollar being about equal to 75 cents of the American dollar.

I ended up feeling a whole lot less stressed over the amount I was spending.

pat_woolford

Today asked the question to a couple from Denver on the last leg of several weeks in various parts of the country, they said "about the same". Did add that petrol/gas is more here but were happy enough about cost increases in US for environmental reasons.