Foodservice Update Q3 2022: Revisiting Growth Perspectives

The writing is on the wall: economic growth is in jeopardy due to macroeconomic challenges around the world. From severely high natural gas prices in Europe, which affect everything from fertilizer prices to milk powders, to a housing crisis, and continued partial lockdowns in China. Coupled with rising interest rates, softening equity markets, and negative real wage growth, consumer confidence surveys unsurprisingly outline a worsening outlook for demand. It is likely that the US and Europe will both be entering a recession over the next 12 months.

Report summary

In Europe and the...

Biden to Take Side on Gas Tax Soon

President Biden said Monday that he may make a decision within days on seeking a pause to the federal gasoline tax as Americans deal with soaring gas prices.

"I hope to have a decision based on the data I'm looking for by the end of the week," he said in Rehoboth Beach, Del.

Gas prices started increasing last year and surged following Russia's invasion of Ukraine, which disrupted the global oil market. The average cost of a gallon of unleaded fuel in the U.S. hit $4.98 on Monday, according to AAA...

Record Gas Prices Heighten Supply Chain Concerns 

The national average for regular gasoline hit a fresh record high at $4.96 a gallon on Wednesday, according to AAA. This is up 28 cents in the latest week and nearly $1.90 a gallon higher than the year-ago average. 

The national average has been steadily climbing in the latest month with 14 states now recording their average gas price at $5 a gallon or more. 

Diesel prices are also forging new records and surged to $5.72 a gallon today based on the latest AAA data. This is 17 cents higher than this week last year and is heightening concerns for participants throughout the supply chain.

Diesel is an essential input for the production and transportation of a variety of goods. For instance, higher diesel costs are raising the trucking costs of livestock to the processing plants, intensifying inflationary pressures on consumer prices...

U.S. General Merchandise Unit Sales Fell 7% in April, as Retail Revenue Declined 1%, Reports NPD

As demand softens, the retail product mix needs to attract both value seekers and premium buyers

The consumer’s willingness to spend has been crucial to maintaining a healthy level of retail performance throughout the pandemic, but demand has been softening for several months. April 2022 U.S. general merchandise unit sales were 7% lower than a year ago, creating a 1% decline in sales revenue, according to The NPD Group.

“Higher retail prices have buffered demand declines but their escalation, combined with rising gas prices..."

Biden Administration Expands Ethanol Gas Sales Amid Decades-High Inflation 

On Tuesday, President Joe Biden announced that his administration will allow the year-round sale of E15 fuel, which is normally banned in most states during the summer months due to air pollution concerns.  

E15 is a gasoline blend that uses up to 15 percent ethanol—a renewable fuel made from various plant materials including corn. The move to lift the summertime ban on E15 could help save consumers money at the pump.

According to the U.S. Environmental Protection Agency (EPA), E15 is available in 30 states at just over 2,300 stations. Vehicles approved for E15 use include flexible-fuel vehicles and conventional vehicles of the model year 2001 and newer. 

Regular gas currently averages $4.08 a gallon, up from $2.86 a gallon a year ago, according to AAA. The national average for a gallon of regular gas is likely to decline if oil prices remain below $100 per barrel, notes AAA. 

Yesterday, the U.S. Bureau of Labor Statistics reported that consumer prices gained 8.5% since last March, the largest increase since December 1981. Inflation has achieved fresh 40-year highs for five consecutive months...

Bojangles to Give Away $1 Million in Free Gas

Bojangles, the legendary Southern food chain known for its chicken, biscuits and tea, is giving away $1 million in free gas to help customers offset the rising cost of fueling up their tanks.

Beginning today until supplies run out, every purchase of a Bojangles Family Meal – featuring 12 or 20 pieces of bone-in chicken, plus scratch-made biscuits, choice of home-style fixins and Legendary Iced Tea® – will come with a $10 gas gift card.

“Southerners are known for being friendly neighbors, so as a Southern..."

What Gas Prices Mean for Restaurants

Starting last spring, prices across the board began to rise as sharp increases in demand for goods and labor intertwined with supply chain disruptions. No particular industry, product or service has been spared by rising costs which have been passed along to consumers. The rate of consumer inflation continued to rise to a 7.9% annual increase in February, the largest jump since 1982, according to the Bureau of Labor Statistics.

Foodservice menu prices have also been skyrocketing in this environment, driven by higher raw material and labor costs. Despite this, consumers have continued to...