HIGH GASOLINE PRICES COULD BENEFIT SUPERMARKETS

Lynne Miller

Strange as it sounds, steep gasoline prices could have a positive impact on supermarkets.

As they start their summer vacations, consumers are feeling squeezed every time they pull up to the gas pump. But they're not scratching their travel plans. They are, however, cutting back on restaurant spending in response to high gas prices, according to a new consumer poll by Technomic, the Chicago-based food-service consulting firm.

In an online survey of 500 people, nearly a quarter of consumers reported cutting back on extras such as sides, salads and desserts, compared to just 10% of consumers surveyed in November 2005, the poll found.

Like sticking with a diet, consumers often resolve to eat out less but then cave in to temptation. In these times, however, consumers are doing a better job resisting restaurants altogether. Those who responded to the poll were asked whether they agreed or disagreed with the following statement: "In the past two weeks, you ate out or ordered food from restaurants more than you had planned." Just under 30% of respondents expressed agreement. That's quite a drop from last year. In April, May and July of 2005, some 35%, 39% and 47% of consumers, respectively, said they agreed with the statement.

Of course, the numbers don't tell the whole story. It's obvious that people haven't stopped dining in restaurants or ordering takeout food. When they do go out, though, people are taking steps to cut costs. The Technomic researchers found increases in belt-tightening strategies such as choosing quick-service restaurants instead of full-service restaurants, selecting cheaper full-service restaurants, ordering less expensive entrees or fewer shared entrees, ordering takeout instead of dining in and enjoying fewer alcoholic beverages.

Obviously, the survey results aren't going to make restaurant operators happy. What about retailers?

People still have to eat, so the loss for restaurants could translate into small gains for supermarkets. Consumers are not going to turn into gourmet chefs overnight, but they are likely to spend more on fresh foods, groceries and other ingredients for home-cooked meals.

"In general, grocery spending is the least impacted by gas prices in terms of people cutting back on spending," said Michael Allenson, Technomic's director of consumer research. "The question is how much can the shift help the industry? It could help at a modest level, but it's not a straight transfer. If anything, [supermarkets] stand to gain a little but not as much as restaurant operators stand to lose."

Inflated prices at the gas pump are not the only reason for belt-tightening. Across the country, mortgage rates have gone up, the real estate market has cooled off and the growth in the value of homes has slowed down. No wonder people are watching their discretionary spending.

Consumers of course don't all behave the same way. Those most likely to change their eating habits are not the drivers in the BMWs. When people start trimming the fat from the budget, Allenson noted lower- and middle-income consumers reduce food spending costs first, while affluent consumers trim vacation plans first.