Key points:
- Higher gas prices are likely to be a modest drag on traffic to national limited-service restaurants, less so for local establishments and full-service restaurants.
- As has been the case since mid-year 2025, in full-service, independents continue to take share-of-traffic from national and regional brands, and full-service continues to outpace limited service.
- We’ll be at the National Restaurant Show this weekend. LMK if you’d like to meet up to discuss this note.
This year’s surprises are just as surprising and challenging as last year’s; surprising means different, and this year, it’s sky-high gas prices. Advan has foot traffic and transaction data to try to untangle how that is impacting restaurant visitation and consumer spend. Given that this is earnings season, we also have ample company results and commentary to add color. Our conclusion: higher gas prices, thus far, are likely to be a modest drag on visitation to national limited-service restaurants, less so for local establishments and full-service restaurants.
Recall that the last gas spike was June 2022, a time when household savings accounts were bumper (due to fiscal stimulus) and before inflation ripped. This time around, less affluent households are more strapped. Another difference was that in 2022, we were coming out of the pandemic, and there was a lot of pent-up demand for going out and about; nothing was going to stop that - YOLO. The table below shows that there was little curtailment in demand in March of 2022 in response to the spike in gas prices, but when a second step up in May happened, there was with MoM growth decelerating from +3.5% to +0.9%. For the next two months, demand remained sluggish until gas prices fell in July and August, leading to a better August in restaurant spend. Turning to 2026, there was also some demand destruction with MoM* growth in food service decelerating from +0.5% to +0.1% (adverse weather was also a likely contributor). (April PCE has yet to be reported.) Advan’s traffic index (below) shows that limited-service traffic has modestly softened since late March.
Real personal consumption figures tell a similar story; below we show 2026’s. That is again the slower rate during March with limited-service slowing -160bps MoM and full-service, -260bps. And so, that slowdown likely reflects some gas price impact, as well as adverse weather.
Advan has three restaurant indices: full-service national / regional brands (539K* establishments), full-service independents (329K), and limited-service national / regional brands (293K). Advan’s traffic data points to a slight slowdown during March for full-service independents (local) and a touch more for full-service and limited-service national brands. During April, the trend improved modestly for full-service. We suspect that full-service local is more levered to affluent households and special / only occasional visits, allowing it to better shrug off the gas price impact. By contrast, limited-service has a broader customer base, and it is typically a home-meal replacement. As such, when households are facing budgetary pressures, they become more prone to cook at home. (We suspect that our full-service local index is comprised of a broader population of local establishments than the BEA’s PCE figure, providing an explanation for why the index was more resilient than BEA’s series.)What about the commentary from recent results by the national restaurant chains, see Shake Shack tanking -28% on its results. Our view is that commentary from national brands on the health of the consumer have less weight as they are losing share as a category to local. National brands that are outperforming, such as Chili’s and Olive Garden, flagged no consumer / macro slowdown with their reported results (our take). From the results of Sysco Foods, Performance Food Group, and US Food Holdings -- no material impact / slowdown was evident. Their results again showed that national brands are doing worse, as has been evident in the results since the 2H of last year. For Q1, the gap between distributor volumes for Local and National at 490bps was very large vs. the historic trend (Q4 was 410bps). Why are locals outperforming national brands? Or hypothesis is nimbler operations, better localization, the consumer trend towards “authenticity and original,” more frequent menu refreshments, and fewer price increases. It’s a question that we will be seeking answers to at the National Restaurant Association Show in Chicago later this week. After the event, we’d love to compare takeaways and answers to the question.
Finally, we looked at YoY changes in the limited-service customer mix. We looked at Chipotle and McDonald’s. (Our takeaways on Q4 and Q1 results.) As shown below***, visitors with household incomes under $75K produced the strongest growth; whereas incomes above $125K declined (which we take to be the impact of GLP1 uptake, a frequent topic of ours). Additionally, McDonald’s has a heavy campaign (value and otherwise) to take share (and serve well) in the lower income cohort. For April, McDonald’s visits slipped a bit more (-1.3%), whereas Chipotle firmed up (+2.4%). We suspect that the slip is due to higher gas prices, with the decline more pronounced in households with incomes in the $50-100K range.
‘* Here we are using MoM figures because 2022’s are so distorted by the pandemic re-opening.**Yes, those figures are correct. We measure activity at substantially more establishments than BlackBox, or other.*** Advan doesn’t observe visits to locations in urban canyons, indoor malls, airports, etc.
