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Two Major Ways Gas Prices Impact Your Restaurant's Operations

July 11, 2018

 

It is difficult to underestimate the impact of gas prices on individual restaurants and the industry as a whole. With rising gas prices, your restaurant must prepare for consumers to have less expendable income and for your wholesale costs to rise.

 

Fortunately, GWT2Energy is here to help as we concentrate solely on helping restaurants save energy.  

 

Consumer Sales Impacts

Consumers are more budget-conscious when pump prices soar. This translates to a cut back in auto trips, which particularly effects drive-thru restaurants that often rely on travelers stopping by for a quick bite to eat.

 

Then there's the pizza parlors and Chinese take-out restaurants that lean heavily on food deliveries to customers. Higher gas prices force delivery drivers to dig deeper into their pockets to fuel up.

 

Some restaurants will make up for this by implementing, or increasing, a delivery fee (Source: Delish). A customer may hesitate to order when they must pay a $3.00 fee on top of a potential tip to the driver. This makes it attractive to have a restaurant within walking distance of retailers or perhaps a business where you can garner customers as employees go to lunch.

 

A 2015 gas price plunge resulted in consumers spending about 80 cents for each dollar saved from those lower fuel costs, according to a JP Morgan Chase Institute Study. The study also revealed that 18 cents of that 80 cents were spent at restaurants. This is compared to only a 10 percent increase in grocery store spending.

 

From this data, we can see how, to a lesser extent, dine-in restaurants can also suffer from lower sales with higher fuel prices.

 

When gas prices rise again, some of that 18 percent increase may disappear as consumers cut back on what may be considered a luxury.

 

High Diesel Prices and Wholesale Costs

Diesel fuel costs often rise along with unleaded gasoline prices. This results in a situation akin to the pizza delivery driver conundrum.

 

Trucking and train companies must increase load prices to offset the diesel costs. Additionally, diesel fuel keeps most farms running, so the cost increases keep piling up. 

 

A chart from Evans Distribution Systems details the impact of a 19 percent rise in diesel fuel back in 2011.

 

Here's a taste of the depressing accompanying percent rise in food prices:

  • beef; 39 percent

  • corn; 58 percent

  • wheat; 37 percent 

So, gas prices impact restaurant's in a big way. How will you deal with the costs associated with rising gas prices? You can raise retail prices, slice employee-related costs, or perhaps lower wholesale costs by buying local. There are options, though not all of them are ideal.

 

Having a comprehensive energy-saving plan dampens the impact of high gas prices. Here at GWT2Energy, we're not just energy-saving specialists, we're restaurant specialists.

 

Contact us to discuss how we may help.

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