- Restaurant visits in February plummeted and diners traveled shorter distances to visit QSRs and full-service restaurants due to rising gas prices, a report from Placer.ai shows.
- The report specifically looked at visits to the two main Sonic locations in New York City in February. During this period, there has been an increase in the share of visitors driving less than eight kilometers to Sonic restaurants, while the share of visitors driving 10 kilometers or more has decreased significantly. The Cheesecake Factory locations in Cleveland and Pittsburgh saw similar increases in visitors driving five miles or less, while those driving more than 30 miles to dine at The Cheesecake Factory declined.
- Over the past month, gasoline prices have reached historic highs in the United States. The average price for regular unleaded gasoline hit $4.25 a gallon in March, according to AAA, and remained high through the end of April. The rise in gasoline prices coincides with and reinforces an inflation rate reached a peak of 40 yearspinch consumer discretionary spending.
Overview of the dive:
Consumers choosing to travel shorter distances to dine out have a significant impact on foot traffic and sales. Sonic’s monthly foot traffic in February 2022 increased by 6% over February 2020, while traffic in February 2021 exceeded February 2019 traffic by 17%. The two-year increase of approximately 6% was the lowest comparative foot traffic growth measured in Placer.ai’s report, which included data going back to October 2020.
Higher gasoline prices could deter consumers from driving as much, which could impact drive-thru/drive-thru concepts. This trend could also hurt traffic at high-end concepts, such as The Cheesecake Factory, as consumers shift spending. Rising gas costs could also affect heavy delivery concepts, as some delivery providers have added fuel surcharges to offset pressure on couriers.
Indeed, rising gas prices have negatively impacted about 68% of small business 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 pre-order options so customers don’t have to sit idle at the drive-thru. A new report from PYMTS and Paytronix reveals that 38% of consumers would be more likely to order from a restaurant if they could pick up their order at the drive-thru.
Other chains have launched promotions to help ease consumers’ pain. Bojangles, for example, offered $10 gas gift cards with the purchase of a family meal, while Krispy Kreme sells a dozen donuts at the same price as the national average for a gallon of gasoline in the Wednesday to May 4.
While some analysts predict gas prices go remain above $4 through November, incentives may be a necessary tactic to keep foot traffic stable. A new report from Technomic shows that consumers begin to cut restaurant spending whenever gas prices rise above $4 a gallon.