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Gas prices have risen by more than $1 per gallon since the outset of the Iran War and it remains uncertain how long they will remain this elevated. But it’s already having an impact.
Last week, the Japanese owner of the convenience-store chain 7-Eleven delayed the company’s North American IPO, which had been set for this year, until March next year “at the earliest.” The company didn’t cite gas prices specifically, but did say it needs to get the business in better condition, which indeed is typically a prerequisite for an offering.
It’s not certain how long gas prices will remain elevated, and that probably depends on the true outcome of the war. Elevated prices do have an impact on restaurant traffic, according to Black Box Intelligence. And they apparently are having an impact on the convenience-store business.
But to us the bigger question is what this does to the overall state of the economy, even if the war is indeed about to end. Even before the rise in prices, there were questions about the labor market and on the financial health of lower-income consumers. Restaurants’ own costs, meanwhile, are not exactly falling right now, which puts them in a tougher spot.
The uncertainty about the economy going forward makes it tougher to plan ahead. We don’t know what’s going to happen in two weeks, let alone by the end of this year.
This week’s financial news
Chick-fil-A’s franchise disclosure document came out, revealing another year of largely stagnant average-unit volumes. Is the chicken chain moving into another era or is something else going on?
Can Burger King ever catch McDonald’s? I would not plan on it happening anytime soon.
Another big franchisee has filed for bankruptcy, this time Carl’s Jr. The operator blamed the problems on California’s $20 fast-food wage and the brand. But this is also a tough time to be a franchisee.
The way some executives are talking about it, you can just keep closing restaurants and watch your same-store sales grow.
Roll Em Up Taquitos is a Ponzi scheme, or so say franchisees in a lawsuit.
Will drone delivery take off? Companies are looking hard at it. But it’s also expensive and loaded with complications.
Fat Brands employees are getting bonuses so they don’t ditch the company before it’s sold. But landlords want to put the brakes on the sale process.
Number of the week
If McDonald’s stopped growing, it would take Burger King 10 years at 17.4% annual growth to surpass the chain, which would be one hell of an accomplishment.
Quote of the week
“For this to work, I need to put food in a doodad and then the doodad needs to take care of it.” -Leon Davoyan, chief technology officer of Dave’s Hot Chicken, on drone delivery.
On the blog
I wrote about Burger King, Chick-fil-A, struggling franchisees and restaurant chain closures. Check out all my blog posts at The Bottom Line.
On the podcasts
For A Deeper Dive I spoke with Lisa Miller about why consumers don’t think their restaurants are worth it. For The Week in Restaurants we chatted about Chick-fil-A, franchisee bankruptcies, gas prices and Michelin stars.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.