- February restaurant visits fell and diners drove shorter distances to visit QSRs and full-service restaurants due to rising gas prices, a report from Placer.ai shows.
- The report specifically examined visits to the top two Sonic locations in New York in February. During that period, there was a rise in the share of visitors driving less than five miles to Sonic restaurants, while the share of visitors traveling 10 miles or more dropped significantly. Cheesecake Factory locations in Cleveland and Pittsburgh experienced a similar uptick in visitors traveling five miles or less, while those driving over 30 miles to dine at The Cheesecake Factory declined.
- In the past month, gas prices have hit all-time highs in the U.S. The average price of regular, unleaded gas reached $4.25 per gallon in March, according to AAA, and remained elevated through the end of April. Rising gas prices coincide with and reinforce an inflation rate that's reached a 40-year high, pinching consumers' discretionary spending.
Consumers choosing to drive shorter distances to dine out is materially impacting foot traffic and sales. Sonic’s monthly foot traffic in Feb. 2022 was up 6% over Feb. 2020, while traffic in Feb. 2021 outpaced Feb. 2019 traffic by 17%. The year-over-two-year increase of about 6% was the lowest comparative growth in foot traffic measured in Placer.ai's report, which included data extending back to October 2020.
Higher gas prices may deter consumers from driving as much, which could impact drive-thru/drive-in concepts. This trend could also hurt traffic at higher-end concepts, such as The Cheesecake Factory, as consumers shift their spending. Rising gas costs could also hit delivery-heavy concepts, as some delivery providers have added fuel surcharges to offset pressure on couriers.
Indeed, higher gas prices have negatively impacted about 68% of small businesses' recovery efforts, according to Alignable, and 66% of restaurant owners say they are struggling with high gas prices.
The inflationary environment has caused some restaurants to focus more on order-ahead options so customers don't have to sit idle at a drive-thru. A new report from PYMTS and Paytronix finds that 38% of consumers would be incentivized to order from a restaurant more often if they could pick up their order at the drive-thru.
Other chains have launched promotions to help ease consumers' pain. Bojangles, for example, gave away $10 gas gift cards with the purchase of a family meal, while Krispy Kreme is selling a dozen donuts for the same prices as the national average for a gallon of gas on Wednesdays through May 4.
With some analysts predicting gas prices will remain over $4 until November, incentives may be a necessary tactic to keep foot traffic steady. A new report from Technomic shows that consumers start to cut their restaurant spending whenever gas prices surpass $4 a gallon.