NEW YORK - According to new research from Restaurant Research LLC, gradual, long-term gas price increases are unlikely to affect restaurant sales, Nation??s Restaurant News reports.
The survey noted that while sharp spikes in gas prices, such as those experienced after Hurricane Katrina in 2005, can immediately impact consumer spending, the trend does not play out long-term, even at QSRs where customers tend to have lower incomes.
Analyzing sales data from the 10 largest QSR chains from 2000 to 2011, Restaurant Research (RR) concluded that overall economic strength overrides the effects of rising gas prices, despite a correlation between gas prices and QSR sales. The reason, said Phil Mangieri and Wally Butkus, partners at RR, is that high gas prices often reflect increasing demand, a positive economic indicator.
"The conventional wisdom is that higher gas prices mean less money in the pockets of fast-food customers," Mangieri and Butkus wrote. "However, it is important to consider that higher gas prices typically reflect stronger economic activity ?" a good thing for restaurant sales. Gasoline supply shocks are a different story. Higher prices driven by contracting supplies hurt the consumer."??
The survey found restaurant sales performance was most closely related with gross domestic product: when GDP rose, so did sales.
However, gas prices had the second strongest correlation to sales. Accordingly, Butkus said that restaurant operators cannot ignore what??s happening at the pump.
"We??re approaching an all-time high," Butkus said. "I think the higher prices go, the more it impacts the consumer wallet, but so far it??s been offset by an improving economy. The stock market and consumer sentiment are all going up and still encouraging people to eat out. It could become an issue if prices keep going up, but gradual increases have less of an impact."??
Bruce Grindy, chief economist of the National Restaurant Association, said last month that rising gas prices have not significantly impacted total restaurant sales this year, which reached a monthly record of $43.4 billion in February, according to Census Bureau data.