Gas prices hurt restaurant spending at Domino's, Applebee's

Key Points:

• Restaurant chains like Domino's and Applebee's reported softer sales in March as U.S. gas prices surged above $4.50 per gallon due to the war with Iran, prompting consumers to cut back on dining out.
• A Numerator survey found 43% of drivers reduced dining out and takeout spending amid rising fuel costs, with Applebee's CEO noting a significant impact on value-oriented customers when gas prices exceed $3.50.
• Despite industry-wide traffic falling 2.3% year-over-year in March, some chains like Chipotle and Shake Shack experienced stable or growing sales, while others like Outback Steakhouse and Wendy's saw sequential improvements aided by better weather.
• Higher gas prices are disproportionately affecting low-income consumers, leading McDonald's to adopt a dual strategy of value offerings and full-priced promotions, resulting in 3.7% same-store sales growth in Q1.
• Some CEOs, including those at Chili's and Restaurant Brands International, view the challenging environment as an opportunity to gain market share by focusing on value, with Burger King notably outperforming competitors in U.S. same-store sales growth.