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The Effect of High Gas Prices on Restaurants

May 10, 2022

Thanks to inflation and rising gas prices, the nation’s economic recovery from the COVID-19 pandemic has hit a snag in recent months. Research shows that approximately 68% of small and medium-sized businesses have struggled to bounce back due to current gas prices — including many restaurants across the country.

How does what we pay at the pump affect your restaurant’s bottom line? Let’s look at the link between gas prices and restaurants and what you can do to protect your business.

Fewer Diners

When gas prices go up, many households have less discretionary income. A study from AAA reports that rising gas prices forces most Americans to change their driving habits — namely, that they limit the amount of unnecessary driving they do.

While driving to work, the grocery store, or visiting family and friends are usually considered essential, nights out at their favorite restaurants are not. This results in fewer patrons in your dining room and tighter margins each month.

Of course, it is important to note that the type of restaurant you operate will affect how hard hit you are by high gas prices. Quick-service and fast-casual dining will likely see the most significant decrease in patronage, while fine dining restaurants are expected to be largely unaffected by gas prices.

Higher Costs

As gas prices rise and the number of diners at your restaurant shrinks, you may face another challenge: higher food and delivery costs. Rising gas prices can result in higher wholesale costs for your ingredients due to the increased costs of delivering them to your kitchen.

gas rising

 

Similarly, restaurants that offer delivery service may have to reimburse their drivers more due to the higher cost incurred. We already see this happening at delivery companies like Uber Eats and DoorDash, who are offering drivers up to 10% cash back on gas.

What You Can Do

It can be challenging to offset the effects of rising gas prices on your restaurant. You have a few options to offset the cost: you can raise menu prices, reduce portion sizes, or even reduce delivery costs by switching to local suppliers.

However, the best way to prevent gas prices from affecting your restaurant is to invest in the customer experience. Well-trained staff and a positive dining experience will help you keep patrons visiting your business regularly.

Synergy Restaurant Consultants has created an innovative restaurant training app that works seamlessly across multiple locations. Synergy U is an intuitive training application. It’s a powerful, flexible, and affordable digital training and operations platform for restaurants looking to upgrade performance. Reach out to us to learn more.