Gas prices' negative impact on restaurants is widening, Technomic says

May 24, 2006

CHICAGO—Researchers at Technomic point to growing evidence that gas prices are taking a bigger cut out of some restaurants' business.

"There's no doubt that higher gas prices are having a negative impact," Technomic president Ron Paul said in a news release. "To say how great an impact, however, is more complicated, hinging on variables such as restaurant segment and customer demographics."
In a recent poll, Technomic found that consumers feeling the gas-price pinch have intensified efforts to cut back at restaurants over the past six months. One notable change was in the number—22 percent—who reported cutting back on extras such as sides, salads and desserts, compared to just 10 percent of similar consumers polled last November. Increases were also reported across all other cutting-back tactics including choosing quick-service instead of full-service restaurants, selecting less-expensive full-service restaurants, ordering less-expensive entrées or fewer/shared entrées, ordering takeout instead of dining in, and ordering fewer alcoholic beverages.

"Foodservice has become so ingrained in many consumers' lifestyles that it's a tough habit to break or change," said Michael Allenson, Technomic's director of consumer Research. "Many consumers would like to reduce visit frequency, but finding that difficult, they opt instead for various 'trading-down' tactics."

Topics: Operations Management

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