Restaurants across the country are struggling to maintain growth, and many in the industry are looking to Generation Z as a potential lifeline. As The New York Times recently described it, Gen Z represents an “exciting opportunity” for the sector. But the question remains: Is this optimism grounded in real interest from those born between 1997 and 2012, or is it simply wishful thinking in the face of limited options?
Recent data paints a challenging picture for restaurant operators. According to Citizens’ Restaurant, Franchise & Multi-unit team’s Q4 2024 report, same-store sales growth is slowing across nearly every restaurant segment. Casual dining saw only 1.3% growth in the fourth quarter, a stark contrast to the 16.3% growth over the past five years and 23.3% over the last decade. Family dining fared similarly, with just 1.1% growth in Q4, compared to 8.5% over five years and 21.5% over ten. Fast casual restaurants performed slightly better, posting 2.1% growth at the end of 2024, but even this pales in comparison to their five- and ten-year rates of 27.2% and 37.3%, respectively.
One factor behind this slowdown is a shift toward value-driven strategies, as restaurants attempt to offset rising costs, economic uncertainty, and declining consumer sentiment. While offering lower prices may help attract budget-conscious diners, it also limits the potential for robust sales growth.
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Gen Z’s actual engagement with restaurants remains uncertain. The New York Times, citing data from market research firm Datassential, reported that the age group accounted for 17% of patrons at sit-down, mid-priced casual dining establishments in 2024—slightly below their 19.3% share of the U.S. population, according to the Census Bureau. There are signs of interest, such as the 10,000 mostly Gen Z attendees at Chain Fest on Randall’s Island in New York, a 2024 event celebrating the chain restaurants of their childhoods. As Ana Babic Rosario, a marketing professor at the University of Denver, told the Times, “We tend to crave some of those nostalgic moments because we think they’re more stable. That’s how our mind tends to remember the past—more rosy than it really was.”
Despite these challenges, the commercial real estate landscape is experiencing significant activity. Retail and restaurant expansion continues, with more than 7,700 new store openings announced for 2024 and early 2025. Nearly 3,000 of these are restaurants, with fast casual and quick service concepts leading the way. This surge reflects a broader shift in retail leasing, as landlords increasingly favor experience-based tenants to meet growing consumer demand for services and experiences over traditional goods.
However, the success of these new locations hinges on sustained consumer demand. While delivery and fast casual dining have gained popularity, overall restaurant visits are declining. Datassential’s February 2025 data reveals that 29% of Americans are dining out with groups less often than they used to.
For commercial real estate, these trends present both opportunities and risks. The continued expansion of restaurant and experience-based retail tenants could drive leasing activity and property values in the near term. Yet, if consumer demand fails to keep pace, especially among Gen Z, landlords and operators may face increased vacancies and softer rents. The industry’s future may depend on whether restaurants can truly capture the interest—and spending power—of the younger generation.
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