How Rising Gas Prices Will Affect Restaurant Sales

Why It Matters

Rising fuel costs tighten consumer budgets, disproportionately hurting mid‑scale and value‑oriented restaurants, which could reshape industry growth trajectories and profit margins for the remainder of the year.

Key Takeaways

• Gas price surge cuts two‑to‑three restaurant visits monthly
• Mid‑scale and fast‑casual chains feel pressure first
• Higher rents, heating costs compound disposable‑income squeeze
• Menu inflation stabilizes but may rise with diesel costs
• Value‑oriented QSRs gain traffic amid consumer tightening

Summary

The episode of Restaurant Business’s "A Deeper Dive" examines how the recent jump in gasoline prices—now averaging $4 per gallon—is reshaping restaurant traffic and profitability. Host Jonathan Mays talks with Technomic senior principal Rich Shank, who notes that while the long‑term correlation between fuel costs and sales is modest, sharp spikes create an episodic drag that can blunt growth expectations for the year.

Shank points to historical patterns: the 2008 oil shock produced a steep, unexplained sales decline, whereas the 2022 post‑COVID surge was muted because consumers were still willing to spend despite inflation. Today’s $30‑per‑month fuel burden, combined with rising heating bills, rents, and student‑loan payments, erodes the modest boost from recent tax‑return legislation, especially for middle‑ and lower‑income diners who frequent limited‑service and mid‑scale casual brands.

The conversation highlights that higher‑income patrons, often owners of electric or more efficient vehicles, are less sensitive to pump price fluctuations, leaving value‑driven quick‑service restaurants (QSRs) to capture the remaining traffic. Chains such as McDonald’s are doubling down on $3 value menus, while Burger King wrestles with a 20% beef‑cost increase that pressures margins. Menu‑price inflation has settled around 2‑2.5% for full‑service venues but could climb in Q2 as diesel costs affect distributor pricing.

Overall, the gas price shock amplifies existing cost pressures, forcing operators to balance price hikes against consumer price‑sensitivity. Restaurants that can innovate on value propositions or adjust portion sizing—particularly in the burger and steak segments—stand a better chance of preserving traffic and profitability as disposable income tightens.

Original Description

How will gas prices affect restaurants?

This week’s episode of the Restaurant Business podcast A Deeper Dive features Rich Shank, senior principal with the data firm Technomic.

We like talking with Shank periodically to get a pulse on where the industry is at and there are all kinds of questions about it right now, thanks to gas prices.

Gas prices are near a national average of $4 a gallon, according to AAA, up $1 compared with the past year, driven largely by the U.S. attack on Iran.

That has a real impact on consumers at a time when many of them are already feeling pinched by inflation. We ask Shank what kind of impact this will have, what restaurant chains will feel it the most and at what point does it diminish industry growth projections.

We also talk a bit about other issues like beef costs and store operations and what happened with the fast-casual sector.

Always great talking with Rich Shank so please check it out.