Gas-Price Increases Not Good For Foodservice, Says Technomic

Noting the “direct correlation between disposable income and foodservice spending,” Technomic Inc. Executive V.P. Bob Goldin says the run-up in gasoline prices “could not have come at a worse time for our slowly recovering economy. Speaking somewhat ‘provincially,’ we are especially concerned about the almost certain adverse impact rising gas prices will have on foodservice expenditures,” Goldin writes in the Chicago-based research firm’s March Viewpoint newsletter.

According to AAA’s Daily Fuel Gauge Report, the average national price for a gallon of self-serve regular hit $3.76 March 4, up nearly 30 cents from a month ago. Diesel fuel prices have also jumped up strongly and now average $4.08.

Goldin illustrates the impact of rising gas prices with this example: The average household has only $500 of discretionary income per month for everything from entertainment and clothing to education, savings, pet care, vehicle maintenance and foodservice. The average household also buys 75 gal. of gas per month. So a dollar increase in the price of gas takes $75 out of the budget.

“Without question, this can only hurt foodservice,” Goldin writes. “Consumers will divert money that would be spent at restaurants and other foodservice venues to fill their gas tanks.” He adds that consumers also cut back on driving when gas prices increase, which also hurts foodservice–especially full-service operators.

Goldin does note that in past gas-price run-ups, consumers cut back on spending more than visits, which softened the blow somewhat. “But if gas prices continue to rise at the same rate we’ve seen recently, we’re in for some very tough sledding.”

More information on Technomic products and research can be found at technomic.com.

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