Consumers may not be cutting their dining because of high gas prices, at least not yet. But that doesn’t mean those prices aren’t having an impact on restaurants.
Specifically, diners are taking shorter trips when they go to restaurants.
Foot traffic at Sonic Drive-Ins, the car-dependent fast-food chain, slowed in February as gas prices began taking off, according to Placer, which analyzes retail customer visits. Traffic rose 5.9% on a two-year basis in February, the smallest such increase since 2020.
One of the problems: Customers are not traveling as far as they once did to visit a Sonic. According to Placer, 41.1% of visitors traveled less than five miles to reach the chain’s location in East Meadow, N.Y., in the first three months of 2022. That was up from 38.4% in the second half of last year.
At the chain’s location in North Babylon, N.Y., meanwhile, 44.8% of customers came from less than five miles from the location, up from 38.2% in the third quarter of last year.
At both locations, meanwhile, the percentage of customers traveling 10 miles or more to get to the location dropped significantly.
In other words: A greater percentage of the locations’ customers are from relatively close by and fewer customers are making longer trips to get to the restaurants.
That makes sense for a company like Sonic that thrived during the pandemic because it was an option for families to have a dining experience while in quarantine. As consumers have shifted into a more normalized mindset, they’ll be less likely to dine at such a restaurant. They’d certainly be less likely to travel far for it when they can dine out at a restaurant.
Yet it’s not just Sonic. Placer looked at The Cheesecake Factory and found some similar results—25.6% of the diners at its location in Pittsburgh traveled less than five miles to get there, compared with 22.4% in the third quarter of 2021.
The same thing happened in Cleveland, where visits from customers fewer than five miles away increased to 22.5% in the first quarter from 20.4% in the fourth quarter last year.
In both situations, customers from a long distance away declined. The percentage of customers willing to drive more than 30 miles to get to the Pittsburgh location fell from 35.7% to 31.1% and from 33.3% to 25.6% in Cleveland.
Gas prices spiked in February and into March and, even after a modest slowdown over the past month, remain 43% higher than they were a year ago, according to AAA. An American who uses 20 gallons per week, in other words, is paying about $25 more than they did a year ago.
We have traditionally looked at gas prices as a function of budget. Consumers see high prices for gas and cut their budgets accordingly, which often means that restaurants that rely more heavily on lower-income diners would lose business. But high gas prices also impact how much consumers travel, and that has an impact on chains that rely on such customers for their business.
That said, consumers are traveling more now even while spending more on gas. Vehicle miles traveled nationwide rose 10.6% in February, according to the Federal Highway Administration. The data from Placer.ai, in other words, could suggest consumers are less likely to take the kind of specialty visits they made during the pandemic for a special night out, and are instead sticking closer to home, while otherwise commuting more often to work and other places that they had previously avoided.
Customers are typically closer to a McDonald’s (13,400 restaurants) or a Wendy’s (6,000 locations) than a Sonic (3,500). So they have to drive further to get to the latter chain and may be less likely to do so when gas prices are so high.
It remains to be seen whether high inflation keeps customers from dining at restaurants as often as they had been—so far it isn’t, and total restaurant sales hit a record $83.7 billion last month, up more than a quarter from pre-pandemic levels. But high gas prices could have a quiet impact on chains that rely on customers to drive longer distances to get there.