Gas Prices and Restaurants, It’s All a Chain of Events

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Everyone is feeling the effects of the economy, especially at restaurants.  We’re beginning to notice smaller portion sizes, menu items only being available upon request and price increases.  And while it may frustrate restaurant goers, it’s all in part of a chain reaction and restaurants are feeling it too.

One of the biggest things impacting the restaurant industry is the price of gasoline.  When using GasBuddy.com’s historical price chart, this time last year the national average was around $2.80.  Today, prices are nearing $4.

Annika Stensson, Media Relations Director for the National Restaurant Association (NRA), says the impact toward the restaurant industry is mainly in the form of consumers as they are spending less with most disposable income going toward gasoline.

“So, they might skip desserts or appetizers when dining out, resulting in a lower check,” she explains.  “Also, restaurants located along interstates and major thoroughfares, or anywhere you need a car to get to, may see some decline in customer traffic if people choose to cut back on driving because of high gas prices.”

An article by the New York Post titled “Summer Gas Pains” covers some of these harsh realities with prices threatening to surpass $4.

“As sharply rising pump prices continue to shock motorists, it is restaurants and hotels that could be gassed come summer,” they report.

So we’ve stated the obvious reason for how restaurants are being affected.  No surprise there.  But what is it like for restaurants for those who don’t know what happens behind the kitchen doors?

The Columbus Dispatch spoke with restaurant owner Bill Glover of Sage American Bistro who says it’s hitting them in two ways.  He tells them $300 to $400 a month has been added to his operating costs on fuel surcharges and also adds that “margins are already thin.”

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Restaurants in situations like Glovers are put in a tough spot.  They’re paying more and they know their customers are too.

Fox 4 in Kansas City points out the recent federal government report on consumer pricing shows consumer goods have gone up 2.7 percent over last year.  These rising prices, along with everything else Americans are going through, may put some restaurants at risk for losing business if they decide to increase.

So how are restaurants staying afloat?

In Janet Forgrieve’s blog “How Restaurants Are Coping with Rising Food Prices,” on the SmartBlog on Restaurants website, she found some places are still optimistic.  She points out,

“Some analysts even predicted earlier this year that higher food prices could actually be good news for restaurants, at least the bigger chains that can lock in long-term prices on many commodities.”

But what about the small places?

“Some independent restaurants say they’re more insulated than others from both higher prices and weather related shortages of tomatoes and other food products because they’ve been sourcing locally for years and don’t depend on imported ingredients,” she points out.

She also says restaurants can update menus based on guest behaviors.

But everything is on a case by case basis.  And what works and doesn’t work for one restaurant does for another.  Some restaurants can implement certain changes while others cannot.

For more information on how restaurants are coping, visit these other two SmartBlog on Restaurants articles:

How is your restaurant surviving the rise in prices? Or, what changes are you noticing in the restaurants you visit?  What changes are you making?

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