Restaurant operators across the United States are flagging weaker consumer demand as rising gasoline prices, attributed to the U.S.-Israeli war on Iran, squeeze household budgets. Multiple chains that recently reported quarterly results said pump-price inflation has forced customers to cut back on nonessential purchases, and several analysts expect further deteriorations in same-store sales figures among peers in the coming reporting cycle.
Wingstop, the value-focused chicken-wing chain, disclosed an 8.7% decline in quarterly same-store sales and directly linked part of that weakness to higher fuel costs. CEO Michael Skipworth characterized the broader economic backdrop as "extremely difficult for anyone to predict" and told investors the company anticipates sales to contract over the year in part because it expects gasoline prices to stay elevated.
Domino's reported U.S. same-store sales growth of 0.9%, falling short of expectations. CEO Russell Weiner said competitive promotions - which he described as being run "out of our playbook" - contributed to the softer performance. While Weiner stated Domino's was relatively well-positioned to sustain discounting, the company trimmed its sales forecast for the year.
Even chains that recorded modest gains are not presenting upbeat guidance. Chipotle posted better-than-expected comparable-store sales growth of 0.5% for the quarter but held an outlook of flat growth for the year. Chief Financial Officer Adam Rymer said uncertainty stemming from the war and higher gasoline prices factored into that cautious stance.
Industry-wide measures and analyst activity reflect growing concern. According to LSEG data, in April nearly twice as many restaurant-focused analysts reduced profit forecasts for the next quarter as increased them. The LSEG U.S. restaurant index has fallen about 5% since the conflict began in February, erasing more than $40 billion in market value, per the same data provider. LSEG averages also show analysts anticipating sales deceleration at other chains, including Shake Shack and Jack in the Box, in upcoming earnings reports.
Fuel-price data cited by industry sources underscore why restaurants see a link to traffic declines. GasBuddy.com reports the national average for gasoline has reached $4.43 per gallon - roughly a 40% increase versus the same time last year - and prices have surpassed $6 per gallon in California, the country’s largest market for restaurants. The oil-supply disruption tied to the U.S.-Israeli war on Iran, which began in February, is being described in industry commentary as the most significant shock to global oil supplies in recent memory.
Restaurant consulting firm Revenue Management Solutions analyzed 14.6 billion transactions over four years and found that visits to restaurants tend to decline progressively as pump prices rise - with a sharp inflection point at $4 per gallon. The firm’s chief analyst, Sebastien Fernandez, said average gasoline at $4.20 correlates with roughly a 1.5% reduction in visits. If pump prices reach $5.10 or higher, fast-food traffic could fall about 3%, the firm estimated. The analysis also modeled a typical drive-through with 300 daily transactions, concluding a $1 spike in gasoline costs could translate to about six fewer customers per day and roughly $22,000 in lost annual sales.
Pressure on dining demand predated the most recent fuel surge, pushing many chains to deploy value-oriented promotions to retain traffic. Taco Bell, part of Yum Brands, introduced a value meal priced from $3 in January and on a recent earnings report said U.S. same-store sales at Taco Bell rose 8% for the quarter. Mark Wasilefsky, head of restaurant finance at TD Bank, observed that the industry is seeing "a record level of value menus right now."
Promotional intensity has been cited as one factor weighing on results at competitors. Domino’s cited rivals’ aggressive discounting as a reason for softer-than-expected U.S. same-store sales. Even so, some chains appear to be gaining share within budget-conscious segments. Starbucks reported 7.1% quarterly same-store sales growth in North America and CEO Brian Niccol said the company has drawn more lower-income customers who view the chain’s beverages as "a little bit of indulgence." Industry commentary points to demand for affordable treats - such as sweet beverages - as an alternative to larger discretionary spending like vacations.
Looking ahead, investors and analysts will be watching McDonald’s, which is scheduled to report results on May 7. McDonald’s posted stronger-than-expected sales in the prior quarter amid a push on value meals, making its upcoming report a key near-term indicator of how the sector is navigating fuel-cost driven shifts in consumer behavior.
This developing set of trends - elevated gasoline prices, intensified promotional activity, and downgraded analyst forecasts - is creating a more cautious outlook across the restaurant sector. Management teams, investors, and consultants continue to monitor fuel-cost trajectories closely because of their outsized influence on dining-out patterns and near-term sales performance.