U.S. gas prices breached $4 per gallon in every state in March, according to AAA, while JP Morgan predicts they could surpass $6 by the end of the summer.
Regardless, after two years of COVID restrictions, Americans appear ready to get back out on the road.
In fact, AAA found that nearly 35 million people plan to travel via car during Memorial Day weekend, up 4.6 percent vs. last year, when gas prices were considerably lower. A greater portion of travelers are also opting for air and other modes of travel than in previous years.
“While gas prices remain high, people are not delaying or putting off travel plans. In most cases, if they’ve made plans, gas prices alone won’t impact cancellations,” Chip West, retail and consumer behavior expert at Vericast, told The Food Institute.
RESILIENCY TO INFLATION
Consumers are showing surprising resilience to inflation, ABC News reported (May 22). In April, retail sales outpaced inflation for a fourth straight month, according to government data.
Retail foot traffic seems to have bounced back from a drop in March, when gas prices first jumped, a report from Placer.ai shows. Visits in early May were almost back to pre-pandemic levels, with foot traffic the week of May 2nd down only 1.2% relative to the equivalent week in 2019.
Though separate findings from Acosta show that over half of consumers (54%) are dining out less often due to inflation, some segments are still seeing positive results.
For example, Placer.ai found that visits to QSR restaurants are trending up, with foot traffic increasing 0.5% during the week of May 2 compared to the same week in 2019. With more people hitting the road this summer, these restaurant segments could continue to see a boost.
Additionally, visits to coffee shops and bakeries were up almost 40% compared to the week of January 3.
TRADING DOWN
Rather than cutting spending altogether, some Americans are trading down. West noted that, though they’re still traveling, consumers are likely to look for savings and deals on other components of their trip, like lodging, entertainment, and recreation.
About one-third are choosing to trade down when it comes to dining out, rather than going out less, opting for less expensive restaurant and meal options to counter rising prices, Acosta found.
“Restaurants are expected to experience a negative impact as people tighten their budgets, and as a result, are spending less money on dining out,” said Becky Moore, founder of travel resource site GlobalGrasshopper. “This is particularly true for families, who are the primary consumers of restaurant meals.”
When it comes to choosing a restaurant, cost is now the second most significant factor for fast casual diners surveyed by Acosta –– a noteworthy shift from menu variety in August 2021.
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