As inflation and economic uncertainty persist, more Americans are forgoing restaurant visits in favor of eating at home—a marked shift in consumer behavior that is rattling the foodservice industry. The drop-off has been sharp: U.S. diners ate a billion fewer meals out in the first quarter of 2025 compared to the same period last year, Circana data shows, as reported by the Financial Times. Black Box Intelligence corroborates the trend, noting a 1% decline in restaurant visits year-over-year. Fast-food chains have been hit hardest, witnessing a 2.3% drop in Q2 visits versus 2024.
Multiple factors are driving the pullback. Experts point to mounting worries over a slowing jobs market and the added strain of increased product costs following new tariffs. David Kelly, a senior industrial economist at CBRE, has highlighted how lower-income Americans exhausted their pandemic relief savings and now face real income growth lingering below the pace of inflation, reducing their discretionary spending power.
Restaurant executives are vocal about the new landscape on their earnings calls. Denny’s Corporation CEO Kelli Valade described operations in Q1 as playing out in a "very choppy consumer environment, and that has continued through quarter 2." She observed that pressure on household income and volatile consumer sentiment are causing people to pull back, with families “being more selective about where to spend.”
Dine Brands CEO John Peyton echoed these concerns, reporting that Applebee’s and IHOP saw the value mix decrease compared to Q1. “Consumers are still feeling macroeconomic pressure, and as a result, guests continue to manage their check by ordering fewer beverages and appetizers as well as trading down to lower-priced items on our menus,” he said.
Sweetgreen Chairman and CEO Jonathan Neman attributed disappointing results to a "convergence of several external headwinds and internal actions," pinpointing the emergence of a more cautious consumer environment as early as April.
Kenneth Cook, interim CEO and CFO of The Wendy’s Company, pointed to adverse weather for the turbulence seen in the first two months of 2025 and a sharp March drop in consumer sentiment—the largest in recent history—as key reasons for reduced foot traffic.
As price sensitivity grows, restaurants face the challenge of enticing customers back. “It’s going to take a lot of levers being pulled in order to get consumers more comfortable to spend more money out of home,” said Sally Lyons Wyatt, adviser at Circana, to the Financial Times.
The restaurant industry's tepid traffic, slow real wage growth and ongoing price pressures underscore a challenging road ahead as operators strive to adapt to Americans’ new dining realities.
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