Several major U.S. restaurant chains, including Wingstop and Domino’s, have reported weaker-than-expected sales growth in the latest quarter, attributing the slowdown to soaring gasoline prices triggered by the ongoing U.S.-Israeli war on Iran. As fuel costs surge, consumers are cutting back on discretionary spending, including dining out. Analysts warn that the pressure is likely to continue, with chains such as Shake Shack and Jack in the Box expected to report declining sales growth in upcoming earnings.
The conflict, which began in February, has significantly disrupted global oil supplies, pushing average U.S. gasoline prices to $4.43 per gallon—a nearly 40% increase year-on-year. Prices have even crossed $6 in California, a key market for restaurant chains. Wingstop reported an 8.7% drop in same-store sales, while Chipotle, despite modest growth, maintained a cautious outlook citing ongoing uncertainty. Industry data suggests that once fuel prices cross the $4 threshold, restaurant visits decline sharply, amplifying the impact on revenues.
Investor sentiment has also weakened, with the U.S. restaurant index falling 5% since the war began, wiping out over $40 billion in market value. While some brands like Starbucks have seen gains driven by demand for affordable indulgences, others are leaning heavily on discounts and value menus to attract customers. Attention now turns to McDonald’s, which is set to report earnings soon and may provide further insight into how the sector is navigating the prolonged economic strain.
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