As 2025 unfolds, the restaurant and hospitality sectors are navigating a pivotal era. Having emerged from pandemic-related hurdles, the industry is rebuilding with cautious optimism. The quick-service restaurant market, valued at $289.68 billion in 2024, is projected to grow nearly 5 percent over the next decade to $468.98 billion by 2034.
Shifting consumer lifestyles and a growing reliance on convenience-driven food choices are fueling QSR growth around the world. This evolution, shaped by busier schedules and expanding e-commerce integration, is set to drive demand for quick-service offerings significantly.
Despite this positive outlook, fresh challenges such as supply chain and workforce shortages emphasize the importance of strong risk management frameworks for sustained success.
Building resilience with integrated risk management
Uncertainty remains a constant for 2025. Rising costs for food, utilities and supplies, coupled with regulatory shifts and climate disruptions, pose ongoing challenges for restaurants.
Success will hinge on adopting enterprise risk management (ERM) strategies that integrate operational risk, human resources and insurance planning. Proactive maintenance, safety investments and effective risk practices enhance insurability and financial performance. Measures like hurricane-resistant infrastructure and water-detection systems illustrate commitment to risk mitigation and improve insurer appeal.
Addressing profitability challenges
In 2024, U.S. restaurants achieved record-breaking sales of $1.1 trillion, showcasing their post-pandemic resilience. Improved economic conditions, easing inflation and stabilized interest rates supported this growth. Within the QSR segment, younger consumers led the charge, favoring delivery, takeout and streamlined service options designed to match modern preferences.
Yet, the coming year introduces hurdles. Consumer spending in 2025 is likely to tighten as household debt rises, with credit card balances reaching $1.14 trillion in 2024. This financial strain may curb discretionary dining habits.
Additionally, persistent labor shortages continue to pressure operations. By mid-2024, 82 percent of food and beverage businesses were actively hiring, with chefs and cooks comprising 30 percent of vacancies. Outsourcing high-risk tasks like delivery offers one solution, mitigating the burden of climbing auto insurance costs expected in 2025.
Navigating inflationary and labor pressures will require innovative approaches to safeguard profitability.
Enhancing workforce retention through flexibility
Labor challenges persist in 2025, necessitating a shift in strategies. Competitive pay alone is insufficient; businesses must focus on holistic employee satisfaction and well-being.
Poor management and toxic workplace cultures are key drivers of turnover, with 37 percent of restaurant workers citing these as reasons for leaving. To address this, QSR businesses should prioritize leadership training, de-escalation practices and anti-violence measures to foster a supportive environment.
Flexibility also plays a critical role in retention. Over half of hotels now offer flexible scheduling, and restaurants are following suit. Personalized benefits like childcare assistance and mental health programs can further enhance employee engagement and loyalty.
Technology: A double-edged sword
Technology continues to transform the restaurant landscape, offering tools to streamline operations and elevate customer experiences. Self-ordering kiosks, for example, drive efficiency and sales, while AI enhances personalization and encourages repeat visits.
However, these innovations introduce cybersecurity vulnerabilities. Tools like QR codes, while convenient, can be exploited by hackers, leading to costly breaches. In 2023, the average cost of a hospitality breach rose 14 percent to $3.36 million. QSRs must prioritize robust cybersecurity measures and ensure insurance policies address evolving digital risks.
Key strategies for success in 2025
To thrive amid complexities and face challenges head-on, quick-service restaurants should prioritize the following best practices:
- Comprehensive risk management: Regularly review and update risk management strategies and explore alternative insurance solutions like captives.
- Infrastructure investment: Proactively maintain facilities to reduce costs and improve insurability.
- Cybersecurity enhancement: Partner with brokers to identify vulnerabilities and align cyber insurance with industry-specific risks.
- Managerial development: Train managers to build positive workplace cultures and address issues like harassment and aggression.
- Workforce engagement: Tailor benefits to employee needs, focusing on satisfaction and retention.
Preparing for a resilient future
The restaurant industry’s adaptability has been its hallmark through past challenges. By investing in innovation, fostering workforce well-being and embracing integrated risk management, QSR businesses can build a recipe for lasting success.
Kimberly Gore is the National Practice Leader of HUB International’s Hospitality Specialty Practice. She has over 30 years’ experience in the insurance industry with a specialization in hospitality and tourism clients. Kim is responsible for a strategic approach to carrier relationships, specialization and best in class service to benefit each client. Kim is an active member of the insurance community serving as president of IIABHGC and as a board member for IIABSC and was awarded the South Carolina Young Agent of the year in 2010.
