Looking at the latest personal expenditure data from the government, in 2014’s final quarter, consumers spent 9% less than the prior year on gasoline for their vehicles than the year before – or about $33 billion on an annualized basis. At the same time, however, they were apparently driving to restaurants much more as expenditures at eating and drinking places rose 7.4% – about $39 billion on annualized basis. That 7.4% increase well outpaces the 2.4% annualized inflation rate for food during the same period.
Unfortunately, retail food businesses have not benefitted in the same way from those gasoline savings, as expenditures for food and beverages rose 2.1% in the fourth quarter on an annualized basis, even less than the 2.4% annualized inflation rate in the fourth quarter. So it looks like the restaurant industry is gaining in the battle for share of stomach.
Do you expect these trends to continue if gas prices continue to fall, or do you think retail food businesses will bounce back with stronger sales this quarter?