Restaurant Prices in Auckland

Monday, December 21, 2009     Auckland

Last night we had a very good dinner at Auckland's finest Mexican restaurant.  The food was some of the best Mexican I've ever had.  The prices, though, are cause for reflection, so I'm going to lead you through a bit of algebra to compare NZ restaurant prices with what you might expect in the US.  Our initial impression is that all NZ restaurants are a lot more expensive than what we usually see in the US, but the  prices are computed differently.  For one thing, the price listed on the menu includes the 12.5% sales tax.  For another, tipping really is optional in Australia and New Zealand, although 10% seems to be the convention.  In the US we typically tip 18-20% when we are pleased with the service.  So let's do a comparison. 

Tyler had a glass of Sangria (NZ$8.50), a very large and excellent appetizer of mussels in spicy tomato sauce (NZ$15.50, called an Entree here), and the main course was enchiladas with rice, beans, and pico de gallo (NZ$22.50, called the Main here).  There is also another class of smaller appetizer that they call the Starter.  So the entire bill for Tyler's dinner was:

NZ$46.50 plus NZ$4.65 tip for a total of NZ$51.15.

The exchange rate has been right around NZ$1.40/USD, so that is equivalent to US$36.54. 

In the US such a meal would appear on the menu as a certain price P.  When we get the bill, it has 6% sales tax (T) added to it, and we generally add another 20% of the sum of P+T to get the final amount.  So the algebra problem to work out is this:

The final bill F=US$36.54 is composed of the menu price P plus the sales tax T plus the tip B.

F  =  P + T + B

T = 0.06*P

B = 0.20*(P + T)  =  0.20*(P + 0.06*P)  =  0.20*1.06*P

Thus F = P + 0.06*P + 0.20*1.06*P   =  P*(1 + 0.06 + 0.20*1.06)  =  P*1.272

Therefore P = F/1.272  =  US$28.73   This is the equivalent menu price, using US (MI) sales tax and tip rates.

So, considering that this is better than your usual Mexican restaurant, and included the Sangria (which would cost at least $5.00 in the US), perhaps the price isn't that much higher than in the US.