The fundamentals of the restaurant industry are strong, and operators are cautiously optimistic about the year ahead, according to the National Restaurant Association’s 2025 State of the Industry report. The industry is projected to reach $1.5 trillion in sales and add more than 200,000 net new jobs this year, bringing total restaurant and foodservice employment to 15.9 million.
That growth comes on the heels of a challenging year. While the broader economy continued to expand in 2024, restaurant operators faced persistent business pressures. Consumers became increasingly selective with their spending as pandemic-era savings dwindled, and rising costs cut into profitability. Sixty-one percent of operators reported declining customer traffic between 2023 and 2024. Nearly four in 10 restaurants were unprofitable last year. More than half of operators (53 percent) were still carrying debt accumulated since the pandemic, and the cost of doing business continued to rise—with food costs and wages both up over 30 percent compared to 2019. Nearly all operators cited labor (96 percent), food costs (95 percent), and inflation (95 percent) as major challenges.
Despite these headwinds, operators are entering 2025 with measured confidence. More than eight in 10 expect sales this year to either increase (41 percent) or hold steady (41 percent) compared to 2024. Competition is expected to intensify, though, with 48 percent anticipating a tougher battle for customer dollars, including 53 percent of quick-service and 44 percent of full-service operators. Many of the same challenges from 2024—labor costs, food costs, and staffing—are expected to persist. Quick-service operators cite labor costs and hiring as their biggest hurdles, while full-service restaurants are most concerned about food costs.
The Association notes that industry growth in 2025 could be supported by a strong labor market, steady wage gains, and lower interest rates. It also warns of potential downside risks from geopolitical tensions, rising fiscal debt, and political instability.
The State of the Industry report is based on economic analysis, operator and consumer surveys, and industry forecasts. Here are five key takeaways shaping the year ahead.
1. Value and Loyalty Are More Influential Than Ever
Consumer demand for value-driven dining shaped the restaurant landscape in 2024, and that focus isn’t fading anytime soon. Nearly all restaurant operators surveyed by the Association (95 percent) say guests are more conscious of value than before, prompting more than half (53 percent) to introduce new discounts, deals, or promotions.
The approach varies widely by segment. Quick-service brands led the charge last year, with two-thirds rolling out new value offerings, followed by 59 percent of coffee and snack concepts and just over half (54 percent) of fast casuals. In the full-service segment, it ranged from 52 percent of family-dining operators to just a third of fine-dining operators.
Looking ahead to 2025, nearly half (47 percent) of operators expect to introduce new value-focused promotions. The trend remains strongest in limited service, where a majority (56 percent) plan to add deals, while about four in 10 full-service operators intend to do the same.
Loyalty programs are playing a bigger role in where consumers choose to dine, too. More than half (54 percent) of quick-service customers say they prefer restaurants where they are loyalty members, while 41 percent of full-service diners consider it an important factor. The impact is even greater in the delivery world, where 61 percent of customers say loyalty perks influence their choices.
A well-designed loyalty program is a powerful tool for driving repeat visits, which is important because retaining customers remains a key challenge for the industry. Half of all restaurant operators say it was a top concern in 2024. The issue was especially pronounced in full service (56 percent) compared to quick service (44 percent).
2. In-Person Dining Takes Priority
For many consumers, dining out more often comes down to one thing: disposable income. A strong majority say they would visit restaurants more frequently if they had the budget—whether for a sit-down meal at a full-service restaurant (81 percent) or a quick bite at a limited-service spot (76 percent).
This pent-up demand is good news for operators, particularly as most say growing their on-premises business is a bigger priority for 2025 than expanding off-premises sales.
Unsurprisingly, the focus is strongest in full service, where 90 percent of fine-dining operators and 87 percent of casual-dining operators see in-person visits as the key to success. But the sentiment extends across segments—more than 70 percent of fast-casual operators and coffee and snack operators say building on-premises business will be more important for their overall success in 2025, along with 60 percent of quick-service operators.
3. Consumers Strained by Economic Pressures
The economic outlook for consumers is complicated. On one hand, consumer spending is keeping the U.S. economy steady, helping to ward off a recession and adding resilience to overall growth. On the other, inflation has eroded purchasing power, leading many consumers to dip into savings or cut back on discretionary spending.
This financial strain is evident in consumer sentiment. While 48 percent view their local economy positively, only 38 percent say the same about national conditions. Meanwhile, more than half (52 percent) feel their local economic situation is only “fair” or “poor,” and 62 percent hold a similarly negative view of the broader U.S. economy. Perspectives vary by demographic—higher earners, homeowners, and those in urban or suburban areas tend to be more optimistic, as do men and younger generations. Sentiment among Gen Xers, between 44 and 60 years old, is the least positive.
Across demographics and generations, over 60 percent of consumers report difficulty saving for major purchases like vacations or retirement, and at least half say they’re struggling to maintain their lifestyle, pay down debt, or cover everyday expenses. As a result, 40 percent have already cut back on spending, while another 41 percent are cautious, waiting to see how their finances hold up. Only about 20 percent say they feel comfortable enough to spend more freely.
Still, the report found some cause for optimism. The majority of consumers surveyed by the Association (81 percent) expect their financial situation to either improve or stay the same in the next year, with just 19 percent anticipating a decline.
Looking ahead, economic expansion is expected to slow slightly, with real GDP projected to increase by 2.4 percent in 2025—down from 2.8 percent in 2024 and 2.9 percent in 2023.
Inflation remains a significant hurdle for both consumers and restaurant operators. Food and labor costs have climbed more than 30 percent since 2019. Expenses like rent, supplies, credit card fees, and insurance have surged, too. To keep margins intact—typically 3–5 percent before taxes—restaurants have had to adjust menu prices, which have risen over 28 percent since early 2020.
Fortunately, inflation is beginning to ease. Consumer prices are expected to grow by just 2.4 percent in 2025, a decline from 2.9 percent last year and a far cry from the 8 percent peak in 2022. This slowdown has enabled the Federal Reserve to start lowering short-term interest rates, with more reductions likely ahead.
For restaurant operators, lower interest rates signal two key benefits: a commitment to economic support from the Fed and reduced borrowing costs, which could encourage both consumer spending and business investment.
4. Labor Challenges Are Easing, But Gaps Remain
The labor market has become more stable for restaurant operators, with workforce availability better aligned with demand. Still, hiring remains an ongoing challenge. More than three-quarters of operators (77 percent) cite recruitment and retention as a significant hurdle. While staffing shortages have improved, 32 percent of operators report that they don’t have enough employees to fully meet customer demand. That figure is down from 45 percent in 2023 and 78 percent in 2021.
Certain positions remain more difficult to fill than others. Nearly 60 percent of operators say they have job openings that are tough to staff, an improvement from 79 percent in 2022 and 70 percent in 2023. Full-service restaurants continue to struggle with back-of-house roles, with 78 percent of operators finding it difficult to hire chefs and cooks, and 61 percent reporting challenges in filling kitchen support roles. On the limited-service side, operators face the most difficulty hiring managers (61 percent) and customer-facing staff (55 percent).
Despite these challenges, the restaurant industry remains one of the country’s largest private-sector employers. By the end of 2024, it accounted for 15.7 million jobs—roughly 10 percent of the total U.S. workforce.
Economic conditions continue to play a role in employment decisions, and uncertainty looms over future staffing levels. If business conditions deteriorate and the U.S. economy enters a recession, 64 percent of operators say they would likely need to reduce their workforce in 2025. Employment trends will also vary by segment. Full-service restaurant employment is expected to remain more than 150,000 jobs below pre-pandemic levels by the end of the year. However, long-term projections point to steady job growth across the broader industry. Between 2025 and 2035, restaurant and foodservice employment is expected to expand by around 150,000 jobs annually, reaching a total of 17.4 million positions by 2035.
5. Restaurants Are Beefing Up Tech Investments
Most operators plan to ramp up their technology investments as they look ahead to 2025. Roughly six in 10 operators say they intend to invest in equipment or technology to boost productivity in both front- and back-of-house operations. A similar percentage plan to implement tech upgrades aimed at improving the customer experience, while 53 percent are prioritizing investments in cybersecurity to strengthen data protection.
When asked about specific technology-related investments, respondents highlighted a range of priorities, with a strong emphasis on tools designed to drive traffic and sales. Digital and location-based marketing ranked at the top of the list, with 65 percent of operators planning to allocate resources in this area.
More than half of operators (54 percent) plan to integrate technology into back-office functions like tax compliance and food safety tracking. Workforce management software is another key area, with 51 percent investing in tools to support hiring, scheduling, training, and payroll. Point-of-sale system upgrades are on the horizon for 52 percent of operators, while 47 percent say they plan to invest in inventory management software.
Enhancing the customer experience is a major driver of tech spending, with about half of operators allocating resources toward contactless ordering and payment solutions. Smartphone app development is a focus for 40 percent of operators surveyed by the Association—though limited-service brands (48 percent) are significantly more likely than full-service counterparts (31 percent) to do so. Additionally, three in 10 operators plan to implement self-ordering or self-payment systems, such as kiosks or tabletop tablets.
Some operators are also setting their sights on more advanced technology. Artificial intelligence is gaining traction, with 28 percent planning to integrate AI into their operations. Meanwhile, 22 percent of operators are exploring augmented reality for training and marketing initiatives, signaling a willingness to experiment with emerging tools that could reshape the restaurant experience in the years ahead.
