Rising gasoline prices are forcing consumers to cut back on dining out, and restaurant chains are feeling the impact in their latest quarterly results.
Average gas prices have reached $4.45 per gallon nationally, up roughly 41% from just one year ago, according to AAA. In California, prices have exceeded $6 per gallon—particularly challenging for chains with significant presence in the nation’s most populous state.
Analysis from Revenue Management Solutions reveals $4 per gallon serves as a tipping point: consumers gradually reduce restaurant visits until that threshold is reached, at which point the behavioral shift accelerates. At $4.20 average, the firm estimatesroughly 1.5% fewer restaurant visits occur. When prices climb to $5.10 or higher, fast-food locations could see traffic drop by 3%.
The math adds up quickly for individual restaurants. A drive-through with 300 daily transactions losing just six customers per $1 price spike amounts to approximately $22,000 in lost annual sales.
Wingstop reported an 8.7% decline in same-store sales during its latest quarter, with CEO Michael Skipworth blaming higher fuel costs. “It has been extremely difficult to predict this macro environment,” he told investors, noting the company expects continued pressure from elevated gas prices throughout the year.
Domino’s saw weaker-than-expected same-store sales growth of 0.9%, with CEO Russell Weiner noting competitors have become more aggressive with discounting as consumer budgets tighten. While Domino’s remains better positioned to sustain those promotions, the company lowered its annual sales forecast.
Some chains performed better but remain cautious. Chipotle posted 0.5% same-store sales growth but maintained a flat outlook for the year, with CFO Adam Rymer citing gas price uncertainty as a factor.
Starbucks bucked the trend with 7.1% North American same-store sales growth, possibly benefiting from consumers seeking affordable treats. CEO Brian Niccol noted the chain gained market share among lower-income customers viewing their coffee as “a little bit of indulgence.”
Restaurant chains are responding with value-focused strategies. Taco Bell launched a $3 value menu in January and reported 8% same-store sales growth at U.S. locations. TD Bank’s Mark Wasilefsky noted the industry is seeing “a record level of value menus right now.”
The sector has suffered significant losses. The LSEG U.S. restaurant index dropped 5% since the Iran conflict began, erasing more than $40 billion in market value.