News

Technomic survey: Gas prices continue to hurt restaurant spending

December 20, 2005

CHICAGO — An early December survey conducted by Technomic, a restaurant industry research firm, found that 40 percent of restaurant customers said high gas prices have forced them to cut back on dining out.

According to a news release, lower-income consumers weren't the only ones feeling the crunch. The percentage of diners who reported cutting back ranged from 43 percent of those earning less than $35,000 a year to 35 percent of those with annual salaries of $75,000 or more. Of those cutting back, 70 percent said they opted to eat food from home instead of dining out.

But if so many consumers are feeling a pinch, why haven't restaurants seen a corresponding drop in sales?

"The bigger impact is in consumer mindset," said Michael Allenson, director of Technomic's Center for Consumer Research. "What is clear is that consumers across the board are very sensitive to the impact of gas prices on their budget and are gravitating towards food sources that they view as offering a good value."

This change was apparent in attitudinal data compiled by Technomic's ROOT (Restaurant Occasions Ongoing Tracking) research program, which revealed that consumers are more focused on price and value in their restaurant decision-making.

Even though gas prices have dropped recently, consumers still expect future increases. Those surveyed estimated that, on average, gas would be back up to $2.96 a gallon by next summer and $3.90 in three years.

"These expectations seem to indicate that consumers will remain more focused on value for some time to come," said Allenson. "And as long as consumers are concerned about gas prices, it's likely that restaurants will need to step up their efforts to compete for a slower-growing pie."

Read also Gas prices hurt restaurant spending and Pizza sales could rise with softening economy.