Limited-Service Restaurants NAICS 722513

Oct 14, 2025 - Younger Consumers Cutting Spending

• Younger consumers are cutting back on spending, with restaurants among the first to feel the impact, two new studies show. According to the semi-annual Taking Stock with Teens survey, teens’ annual spending has declined by 6% year-over-year and is 1% below the average spending levels from the past 10 years. Also, research from investment bank TD Cowen finds that consumers ages 18-34 are under more pressure than the average consumer. The pullback among younger consumers, who make up about 40% of all restaurant guests, has major implications for the industry, especially the fast-casual segment, which relies heavily on younger guests. Restaurants are attempting to “future proof” their positioning by rebranding or launching youth-focused loyalty, digital, or campus initiatives to maintain engagement with younger audiences. Operators may need to rethink marketing, menu pricing/value tiers, loyalty incentives, and targeting to shore up revenue during lean times.
• Technomic has lowered its 2025 restaurant sales forecast, Nation’s Restaurant News reported in September. The market research firm predicts the annual sales volume across all top 1,500 chain restaurants will reach $478 billion this year, representing a 2.8% increase on a nominal basis. By comparison, industry sales grew by 3.1% in 2024, the industry’s lowest annual increase over the past decade aside from 2020’s pandemic-influenced 8% decline. Performance is expected to vary by category, with a sluggish year predicted for the burger, sandwich, and pizza chains, while sales growth at chicken, Mexican, and coffee concepts are expected to remain relatively strong. The burger sector is projected to grow by just 0.4%, the sandwich sector by just 0.3%, and the pizza sector is projected to fall by 0.2%. These three categories remain stagnant after growing combined sales by less than 1% in 2024.

• McDonald’s has split with the National Restaurant Association over its support for the no-tax-on-tips policy, Nation’s Restaurant News reported in September. The CEO of the fast food giant Chris Kempczinski said in a recent interview “The issue with no tax on tips is it only benefits those restaurants that have tips.” Instead, he suggested a blanket minimum wage for both tipped and non-tipped employees. Central to the dispute is the tipped minimum wage — just $2.13 an hour under federal law — which allows full-service restaurants like Chili’s and IHOP to rely on gratuities to fill the gap to $7.25. McDonald’s has seen its market share shrink in the face of stiff competition from full-service casual chains that rely on tipped wait staff. That uneven playing field has helped those chains offer cheap burger deals that are eroding McDonald’s sales.
• Consumer spending at small restaurants slowed in June versus May, according to new data from fintech company Fiserv, Nation’s Restaurant News reports. Fiserv’s Small Business Index shows that while small restaurants/independents experienced modest 0.4% year-over-year sales growth in June, month-over-month transactions declined by 2.6% and foot traffic dropped 2.5%. June’s negative monthly comparison followed a 5.6% month-over-month drop from April to May. Just 13 states experienced a positive performance in food service and drinking places in June, versus 34 in May. The spending slowdown signals caution for the restaurant industry where traffic, sales, and hiring trends have been mixed so far this year,” according to the National Restaurant Association’s Economic Outlook for mid-2025. The association’s cautious outlook is supported by recent surveys from PopMenu and KPMG indicating that consumers plan to pull back on their restaurant spending amid ongoing economic concerns.