Foodservice Equipment Reports

Gas-Price Rebound And Snow Dampened, But Couldn’t Stall, Operator Sales Growth In February

Our friend Dean Landeche taught us long ago the correlation between gasoline price and restaurant sales trends. And while Joe Pawlak at Technomic Inc. says job gains are a bigger factor in the current remarkable spurt in same-store sales and customer traffic since September last year, there’s no question the gasoline-price trend is a factor.

February saw a significant, though hardly unexpected, rebound in the price of gas as seasonal refinery maintenance during the switch to summer blends and a fire at a big California refinery pushed the national average price for a gallon of regular higher for 40 consecutive days through March 7. Of course, this comes on the heels of a record run of gas prices falling every day from mid-June through Jan. 28.

Voilà, the first readings on restaurant sales and traffic performance in February show a slowdown in same-store sales gains and traffic during the month. Bob O’Brien, senior v.p.-global foodservice for The NPD Group, blogged last week that after rising 4.5% in both December and January, same-store sales for the 60 major chains reporting same-store sales trends for the firm’s SalesTrack Weekly saw a slowing to 2.5% growth in February. Same-store sales for the 60 chains have risen for 12 straight months, O’Brien wrote.

The MillerPulse chain index for February, reported in Nation’s Restaurant News, shows a similar trend. It said the chains it tracks saw a 3.2% increase in same-store sales, following a 6% gain in January and a 4.4% rise in December. Overall traffic fell 0.7% in February, thanks mostly to the severe winter weather on the East Coast. Traffic was up—and same-store sales gains higher—in parts of the country not affected by inclement weather.

The increase in gas prices in February also may have played a role in a slight drop in consumer sentiment as tracked by the University of Michigan’s mid-March preliminary report. The index slipped from a final February reading of 95.4 to 91.2, according to Reuters. But lower- and middle-income households, which are more affected by changes in gasoline prices, generated the entire decrease. Households with incomes in the top third were more optimistic. Still, even at the lower income levels, confidence is at its highest level since the mid-2000s, accounting to the UM’s Surveys of Consumers.

In spite of the structural causes of the gasoline price increase in the U.S., consumers and operators may see another lull in prices: Oil prices hit a six-year low March 16.

For information on NPD research, go to npd.com. The NRN MillerPulse report can be found here.