Restaurant Companies Sound the Alarm on Consumer Behavior

Restaurant Companies Sound the Alarm on Consumer Behavior

Washington, D.C. — U.S. restaurant companies are warning of shifting consumer habits that could slow industry growth well into next year, as households face persistent cost pressures and growing caution in discretionary spending.

In its midyear forecast released Tuesday, the National Restaurant Association (NRA) projected “somewhat dampened growth” for the remainder of 2025 and into 2026, citing a combination of softer foot traffic, reduced average check sizes, and heightened sensitivity to menu price increases.

Cautious Diners, Careful Spending

Restaurant executives say customers are still dining out, but many are making different choices—opting for less expensive menu items, skipping add-ons like appetizers or cocktails, and taking advantage of discounts and loyalty programs.

“We’re not seeing a collapse in demand, but we are seeing a shift toward value,” said NRA senior vice president Sean Kennedy. “Even consumers who are financially secure are being more mindful of how often and how much they spend when dining out.”

Quick-service restaurants have fared better than full-service venues, thanks to lower price points and convenience, but both sectors have reported slower growth compared to last year.

Inflation and Interest Rates Still in the Mix

While inflation has eased from its 2022 highs, food costs—especially for proteins, dairy, and imported goods—remain elevated. Combined with higher wages for restaurant staff and stubbornly high interest rates, operators are struggling to keep menu prices competitive without sacrificing profitability.

Many chains have already reduced portion sizes, streamlined menus, and introduced budget-friendly bundles to appeal to price-conscious customers.

Looking Ahead

The NRA’s outlook suggests that even with strong summer travel and holiday dining seasons, the industry will face headwinds from broader economic uncertainty.

“If the labor market remains stable and disposable incomes hold, we could see gradual improvement in 2026,” Kennedy said. “But for now, operators need to prepare for slower, more competitive growth.”

Analysts say the next six months will be a critical test for brands that rely on higher-margin items and dine-in traffic, with digital ordering, delivery, and loyalty programs expected to play a bigger role in keeping customers engaged.

Sector BreakDown

Washington, D.C. — U.S. restaurant companies are warning of shifting consumer habits that could slow industry growth well into next year, as households face persistent cost pressures and growing caution in discretionary spending.

In its midyear forecast released Tuesday, the National Restaurant Association (NRA) projected “somewhat dampened growth” for the remainder of 2025 and into 2026, citing a combination of softer foot traffic, reduced average check sizes, and heightened sensitivity to menu price increases.

Cautious Diners, Careful Spending

Restaurant executives say customers are still dining out, but many are making different choices—opting for less expensive menu items, skipping add-ons like appetizers or cocktails, and taking advantage of discounts and loyalty programs.

“We’re not seeing a collapse in demand, but we are seeing a shift toward value,” said NRA senior vice president Sean Kennedy. “Even consumers who are financially secure are being more mindful of how often and how much they spend when dining out.”

Sector-by-Sector Outlook

The NRA’s latest report highlights notable differences across dining segments:

• Quick-Service Restaurants (QSRs):
  Projected to post the strongest performance through early 2026, with 2.8% sales growth. Lower price points, combo deals, and aggressive digital ordering platforms continue to attract budget-conscious diners.

• Fast-Casual Chains:
  Expected to grow by 1.9%, supported by customizable menus and perceived “better-for-you” options. However, rising ingredient costs could erode margins if menu prices can’t be raised further.

• Casual Dining:
  Forecast to grow by just 0.8%, as consumers increasingly view these mid-priced restaurants as discretionary splurges. Many operators are introducing weekday specials and smaller portion options to retain customers.

• Fine Dining:
  Facing the steepest challenges, with projected 0.2% growth—essentially flat. Wealthier customers are still spending, but international travel and luxury retail are competing for the same discretionary dollars.

Inflation and Interest Rates Still in the Mix

While inflation has eased from its 2022 highs, food costs—especially for proteins, dairy, and imported goods—remain elevated. Combined with higher wages for restaurant staff and stubbornly high interest rates, operators are struggling to keep menu prices competitive without sacrificing profitability.

Looking Ahead

The NRA’s outlook suggests that even with strong summer travel and holiday dining seasons, the industry will face headwinds from broader economic uncertainty.

“If the labor market remains stable and disposable incomes hold, we could see gradual improvement in 2026,” Kennedy said. “But for now, operators need to prepare for slower, more competitive growth.”

Analysts say the next six months will be a critical test for brands that rely on higher-margin items and dine-in traffic, with digital ordering, delivery, and loyalty programs expected to play a bigger role in keeping customers engaged.