Restaurants Under Threat
Costs Skyrocket and Consumers Cut Back
In the first half of 2025, US restaurants and bars saw one of the weakest six-month periods of sales growth in the past decade, according to a CNN analysis of Commerce Department data. This year showed weaker growth than during the Covid-19 pandemic, when restaurants and bars closed due to lockdown orders.
With food prices still high and economic uncertainty shaping spending habits, Americans are rethinking how and where they spend their food dollars. A recent Harris Poll survey found that 89% of U.S. consumers report eating at home more frequently to save money. While dining out hasn't disappeared entirely, spending habits have shifted—people are cutting back on non-essentials, and restaurants that don't offer clear value propositions are struggling.
The National Restaurant Association's 2025 State of the Industry Report found that for 80% of consumers, dining out has become more calculated. People are more inclined to utilize discounts for dining during less busy times or for discounted add-ons.
This drop-off has been sharp: U.S. diners ate a billion fewer meals out in the first quarter of 2025 than in the same period last year.
This slower pace of spending comes as low-income consumers continue to feel the weight of the higher cost of living. In a recent earnings call, Ian Borden, CFO at McDonald’s, said low-income households are skipping meals like breakfast “or they’re trading down either within our menu or they’re trading down to eating at home.”
Executives at Jack in the Box and Dine Brands, the owner and franchisor of restaurants including Applebee’s and IHOP, said they have noticed similar trends.
“Traffic at restaurants has generally been down for a couple years largely due to the lower-income consumer being stressed by inflation, but now the middle-income consumer is also under pressure,” said Michael Zuccaro, vice president of corporate finance at Moody’s Ratings.
An increasingly cautious consumer means restaurants currently don’t have the flexibility to set prices that they had a few years ago, and that’s putting many restaurants in a tough spot as they feel the sting of weaker sales and tariffs all at once.
While the restaurant industry has never been one to sit still, in 2025 it’s not just evolving—it’s adapting under pressure. According to a recent midyear survey of restaurants representing over 5,000 locations across the U.S., the story of 2025 so far is one of resilience through strategic adaptation.

