For the July 4th holiday, Sheetz announced it is dropping prices on two types of gas to help drivers save money at the pump. Effective immediately, the convenience store chain is charging $3.99 a gallon for Unleaded 88 and $3.49 a gallon for E85, according to a company news release. It is a limited-time offer available through July 4, 2022.
As readers know, the U.S. economy is in a precarious spot. While demand is still red hot, inflation, housing, labor shortages, the Ukraine invasion and supply shortages are serious headwinds.
But fuel prices, among all others, are what impact discretionary income and are by far the biggest threat to foodservice spending. So when Sheetz has come up with a direct solution to this problem (over the short-term), the overall industry should take notice.
Consumer Fuel Spending Has Doubled
U.S. households are now spending the equivalent of $5,000 a year on gasoline, up from $2,800 a year ago, according to Yardeni Research. That’s a serious chunk. While it is true that Sheetz sells fuel, there are strategies all restaurant operators can employ with a little “help” from their manufacturer partners.
These may include giving away gasoline cards with each meal, tying fuel points to loyalty points, sponsoring ride-sharing and discounting transportation for larger groups.
Give Gasoline Cards Away As Part of the Meal
Food companies can build eminence and loyalty with operators by donating gas cards in increments of $5 or less. This is an excellent way to help overcome patron hesitancy to spend on gas and also shows some creativity to understand an operator’s pain points. Let’s be honest: Manufacturers see gross margins of 60-70%, while operators are lucky to get 5%.
Tie Rewards Points to Fuel Points
As we have learned from weak economic cycles, restaurant traffic declines as fuel prices increase. What becomes very important is loyalty. Using the 80/20 rule, we estimate 80% of restaurant revenue comes from 20% of patrons. This means pulling in the most profitable customers will lead to more loyalty and hopefully, more frequent visits.
Sponsor Ride-Sharing Programs
As traffic begins to decline and operators are still faced with surcharges from delivery aggregators, supplier-sponsored programs that allow patrons to ride at a discounted rate to their favorite eatery is an option. Instead of paying fuel subsidies to the restaurants themselves, this option gives sponsors the opportunity to partner directly with the likes of Uber and Doordash.
Provide Group Discounts for Parties
Food suppliers can think of this last idea as event promotions. Alcohol companies do an excellent job with these ideas. Sponsor your brand in-house at a chain or high-volume independent to develop patron-pull for your menu items. Provide discounted ride sharing (think of a trolley or a party van) or use it in conjunction with some of the ideas we have shared here.
Gasoline Prices Will Moderate – Eventually
Economists don’t expect fuel prices to stay at historic levels indefinitely, nor do we. In the meantime, suppliers and distributors can use this opportunity to expand and strengthen customer relationships by delivering real solutions to this moment’s issues. We encourage suppliers to come up with creative ideas of their own to help customers with this very real but temporary problem.
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