"Higher gas prices are putting a drag on restaurants' overall revenue growth," said Michael Allenson, director of Technomic's Center for Consumer Research. "While only a small percentage of consumers are actually cutting back, many are restraining growth in their restaurant spending."
In its most recent consumer survey on the dining out and rising gasoline prices, Technomic asked consumers how gas prices were influencing their dining choices. On average, 40% said they had cut back within the last week.
Lower-income consumers weren't the only ones feeling a crunch. The percentage cutting back ranged from 43% of those earning less than $35,000 a year, to 35% of those earning over $75,000. Of those cutting back, 70% said they opted to eat food from home instead of dining out.
However, if so many consumers are feeling constricted, why haven't restaurants seen a corresponding drop in sales, Technomic wondered? Consequently, Technomic analyzed its recent research against restaurant performance and current macroeconomic trends.
"The bigger impact is in consumer mindset," explained Allenson. "What is clear is that consumers across the board are very sensitive to the impact of gas prices on their budget and are gravitating towards food sources that they view as offering a good value."
This change in consumer mindset was apparent in attitudinal data compiled by Technomic's ROOT (Restaurant Occasions Ongoing Tracking) research program, which revealed that consumers are more focused on price and value in their restaurant decision-making.
Even though gas prices have dropped recently, consumers still expect future increases. Those surveyed by Technomic estimated that, on average, gas would be back up to $2.96 a gallon by next summer and $3.90 in three years.
"These expectations seem to indicate that consumers will remain more focused on value for some time to come," said Allenson. "And as long as consumers are concerned about gas prices, it's likely that restaurants will need to step up their efforts to compete for a slower-growing pie."
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.