Rising Gas Costs Holds off Mealtime Traffic

Rising Gas Costs Holds off Mealtime Traffic Americans are cutting back expenditures at restaurants because ever-rising fuel costs are cutting into consumers’ discretionary incomes. Gasoline costs that have risen throughout the year and pinched restaurant patrons' wallets rose to new all-time heights. And the latest pump-price surge could cause significant declining guest traffic to hurt the nation’s restaurant industry. While high gas costs have been cited as a cause of cutback in mealtime spending, how that shock affects consumer spending is the $64,000 question for economists, foodservice operators and industry analysts, reported by Nation’s Restaurant News. "Our rule of thumb is that every penny increase at the pumps drains up to $1.5 billion out of household cash flow," said David Rosenberg, an economist with Merrill Lynch & Co. Inc. in New York. "Year-to-date, gas is up nearly 60 cents [a gallon], which equates to roughly a $90 billion drag on the consumer," Rosenberg noted in a research report. Joshua Shapiro, chief U.S. economist for MFR Inc., a consulting company based in New York, translates that drag into unappetizing terms. "The higher the energy prices go, the less money is left over for discretionary spending and I would imagine that restaurant spending is certainly discretionary," he stated. "You have a double whammy for restaurants in that people have to drive to them, and that's all the more reason to think twice," Shapiro added. “Gasoline prices were now at a point where there would be some impact on spending patterns," said Matthews, who is based in Salt Lake City. "Very possibly, if it takes an extra twenty bucks to fill up the tank of gasoline, maybe that's the $20 that would have been spent to go out to dinner."