The Secret to Restaurants' Woes? Check the Freezer Aisle

Read an old novel, or watch old movies, and you might be struck (as I am) by the dearth of restaurant meals. Only rich characters dine out frequently. The everyman might get a quick breakfast at a drugstore or a coffee shop, but a real sit-down dinner? For regular people, that was for big dates, or special occasions, not a regular occurrence. Most of the food that people ate -- and the overwhelming majority of dollars they spent on food -- was home preparation, not restaurant service.

Times certainly have changed. The average American spends slightly more on bars and restaurants than they do on home cooking. Since restaurant meals cost more, this still means that most people get most of their food from the refrigerator. Nonetheless, the average American eats out about five times a week. Compared with any time in history, this is stunning. And it leads to a stunning question: Why aren’t restaurants doing better financially?