Supply and demand has caught up to the oil industry, and the lowest prices seen since the early 2000s are wreaking havoc all across the macroeconomic landscape. In short, it’s a bad time to be around oil.
There are, however, two different oil markets, the boom market and the legacy market.
In North Dakota’s Bakken Region, operators who were the smartest people around 18 months ago have a grim outlook. Marcus Jundt, a multi-unit operator and franchisor of Uberrito, has 61 restaurants, four in the Bakken and 57 around Houston.
He’s seeing effects on oil in boom and legacy markets. He doesn’t plan on closing down any of his four Williston restaurants despite a 30 to 40 percent dip in business, but his competition is in a dire situation.
“Mentally, I’m preparing myself for half the restaurants closing,” said Jundt. “I think it’s going to be a bloodbath.”
The legacy oil towns around Houston have seen rough trends as well, but not as bad as the Bakken.
“It’s definitely down from a year ago, no doubt about it,” said Ollie Wilkins, a two-unit Firehouse Subs operator and area representative for the brand in West Texas.
Wilkins said his Midland restaurant is still No. 1 in the system, even as traffic has sunk 10 to 15 percent and catering has dropped 30 percent. As the remaining roughnecks trade down in price, that’s hurting full-service restaurants. Two local casual diners shut down after the August drop in oil prices, citing financial struggles.
Trading down could just be the beginning of the oil patch’s issues if the oil debt bubble bursts.
“If this is the bottom, I’ll be really happy,” said Wilkins.