Your Favorite Food Can Tell You About What Your Money's WorthBy
Domino’s, Hooters and Nobu tell very different dollar stories
London’s premium on dining, Frankfurt’s cheap pizza revealed
For three decades, Big Macs have been the benchmark when it comes to measuring currencies in terms of a single product. But what if gauging your purchasing power parity with two all beef patties, special sauce and the rest isn’t to your taste?
In an effort to diversify the food-based FX comparison basket, here’s a selection of alternative indexes. It’s a somewhat lighthearted endeavor, but takes on fresh significance given the recent volatility -- with a surge and subsequent retreat -- in the dollar.
A strong greenback has become a source of anxiety among some at the Federal Reserve, as well as for emerging-market investors and American exporters. Maybe latte drinkers in the U.S. should be added to the list:
While Starbucks may not be quite as ubiquitous as McDonald’s, the coffee chain’s outlets are hard to miss in any big city. Checking menus at locations next to Bloomberg offices in New York, Tokyo, Frankfurt and London, the effect of the strong dollar is quite clear. In latte terms (including applicable taxes), the U.S. currency is about 10 percent overvalued versus the yen, and 25 percent overvalued to the pound.
By comparison, in Big Mac terms the dollar is a whopping 60 percent overvalued against the yen and 30 percent too dear to sterling.
The Big Apple doesn’t have the most expensive pizza though:
London’s exorbitant prices suggest the pound is more than 26 percent overvalued, even after its 16 percent plunge against the dollar last year, the most of any developed-market currency.
One challenge for the pizza index: a disparity in sizes. A medium pie measures 12 inches in the U.S., 11.5 inches in the U.K., 11 inches in Germany, and a meager 9 inches in Japan. Even so, the discount in Frankfurt is remarkable, suggesting the euro is undervalued by almost 50 percent.
When it comes to chicken wings, New York fans of the sports-bar staple -- or fans of the Hooters Inc. staff that serve them -- aren’t the only ones shelling out.
In Gotham, diners are even paying a premium in domestic terms, looking at prices in the location in Clearwater, Florida, where Hooters got its start in 1983. The expense is only comparable with Tokyo, and even then, prices for the Ginza branch incorporate a 10 percent service charge. For New Yorkers, that’s extra.
Hooters is not yet found in London, and outlets that take Europe’s shared currency are limited to three in Austria and one in Frankfurt. For a U.K. comparison, Nottingham, north of London, provides the sole point of reference.
Finally, for high-end dining, the table is more level -- with one notable exception:
Black cod with miso is the dish that chef Nobuyuki Matsuhisa is perhaps most famous for. Again, prices include taxes and any applicable service fees, but not tips. Only in Tokyo do diners get more bean paste for their buck than New York, albeit marginally. Meanwhile, London enhances its reputation as an expensive place to eat out: the Nobu index suggests the pound is overvalued by 30 percent.
— With assistance by Masaki Kondo