MW 'We're not too worried about gas prices': Retailers like Darden and Dollar General say their customers are fine, for now
By Bill Peters
Who's afraid of $4 gas? Not the executives of these restaurant and retail-store chains.
Darden restaurants has said "we're not too worried about gas prices, and we'll be able to react however we need to if they stay really high for a while."
Since the Iran war began, everyone has been worried about surging gas prices - except, apparently, executives at retailers like Dollar General and Urban Outfitters, and restaurant chains like Olive Garden parent Darden Restaurants.
Executives at those companies, as well as some analysts, say past spikes in gas prices due to previous conflicts abroad haven't weighed on consumer demand.
"I've been through a number of these cycles, I don't know how many," Darden Restaurants $(DRI)$ CEO Rick Cardenas said on the chain's earnings call Thursday. "When there's a sudden and significant price increase in gas, there can be a brief pullback, but that's usually only a few weeks."
He said that higher gas prices normally put more pressure on durable goods - that is, products that last longer, like electronics and appliances - and less on services, like restaurants. Consumer visits to restaurants, he added, were more directly tied to gross domestic product.
While Cardenas said demand could suffer if gas prices stay higher and hit GDP, he noted that the chain was prepared to adapt.
"In general, we're not too worried about gas prices, and we'll be able to react however we need to if they stay really high for a while," he said.
BTIG analyst Peter Saleh, in a research note last week, also said that years of data on gas prices, restaurant same-store sales and foot traffic showed there was little evidence that higher gas prices kept people away from dining out.
Even executives at discount retail chain Dollar General $(DG)$, whose lower-income shoppers have suffered disproportionately from higher prices, said they saw more good in business trends than bad.
"We are watching the potential for the changes in higher gas prices," Dollar General CFO Donny Lau said on the company's earnings call last week. "But overall, we do continue to believe there are more tailwinds than headwinds, and feel really good about the momentum we're seeing on this front."
Neil Saunders, managing director and retail analyst at GlobalData, told MarketWatch that this isn't the first time people have weathered a surge in gas prices this decade, following Russia's invasion of Ukraine in 2022. But he noted that this month's increases have landed on top of a broader pullback in spending on things like clothing and furniture over the past several years, as shoppers continue to battle with inflation.
"If you have to pay more dollars for your gas, you have less dollars to spend on something else, and that 'something else' is usually discretionary spending," he said.
"I don't think people are fully accepting of, or have gotten used to, the price of things, especially for groceries," Saunders added. "So any sharp price rise in a sensitive product like gasoline has more of an impact. Arguably, I think it colors people's perceptions more."
As of Thursday, U.S. gas prices on average hovered at around $3.88, according to AAA. That's a nearly 33% jump from a month ago. However, at least momentarily, it's still lower than the levels reached in June of 2022, when average gas prices topped $5.
The short- and long-term impact of war with Iran
Still, as the Iran conflict continues to drive those prices higher and mangle the world's shipping networks, the current nonchalance of some restaurant and retail CEOs could be a tough sell for investors, especially since shoppers are grappling with several years of cost-of-living increases.
The war, and the attacks on ships in the Strait of Hormuz, had put some negotiations between retailers and the companies that handle their shipping on pause, port officials in Los Angeles said this month, as businesses became wary about longer-term commitments. Still, representatives for the ports of Los Angeles and Long Beach, as well as the Port of New York and New Jersey - each a massive import hub - said they hadn't yet seen any cargo disruptions.
Saunders said it could take months of higher fuel prices - and thus higher shipping costs - before retailers passed on the effects to consumers in the form of price increases. And he noted that retailers, particularly the larger ones, have more ways to absorb any extra costs.
Some analysts felt the retail industry could stage a rebound this year as more generous tax refunds pad consumers' wallets. While investors have cheered some chains' quarterly results, Saunders said he believed their financial forecasts for this year still suggested caution.
"The guidance that's been given for the year ahead is not terrible, but it is soft," he said, adding: "They're all saying, 'Look, the consumer sentiment is soft.'"
Elsewhere, Jefferies analysts, in a research note on Thursday, said that an executive at Urban Outfitters $(URBN)$ had told them that during previous stretches when gas prices reached $5, the company hadn't seen a "meaningful impact" on demand at its Anthropologie and Free People stores. While demand at the company's namesake Urban Outfitters locations waned, it was tough to break out that impact from broader issues with demand at the chain as it tries to win back younger customers, management said, according to the note.
Levi Strauss $(LEVI)$, meanwhile, said that the Middle East accounted for less than 1% of its total business. The denim maker said the amount of product it got through the Strait of Hormuz was "very, very minor."
"You think about the impact of oil in businesses like ours - I mean, we went back [...] and looked at what happened in 2008, what happened in 2011, what happened with the Russia-Ukraine war," Harmit Singh, Levi's chief financial and growth officer, said at a conference last week. "The thing that we saw was sales didn't suffer at all. There was not a dramatic impact."
However, other executives at companies that sell discretionary goods that people want, but don't necessarily need, have expressed anxiety on the war's impact. Polaris CEO Michael Speetzen, whose company makes snowmobiles, boats and three-wheel motorcycles, said as much at a conference this month.
"Certainly, the Iran developments are going to inject new challenges," he said. "Consumers are just a little bit nervous relative to a product that they may like to have, but don't necessarily need. And for us, that makes up about 40% of our company."
-Bill Peters
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March 19, 2026 14:59 ET (18:59 GMT)
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