Restaurants NAICS 722511, 722513, 722514

Apr 14, 2025 - Decline in Consumer Confidence Threatens Restaurant Industry

• The dramatic drop in consumer confidence is expected to cause diners to pull back on spending, presenting restaurants with ongoing challenges amid a deteriorating economic landscape, Nation’s Restaurant News reports. In April, consumer confidence fell off a cliff according to the University of Michigan, whose consumer confidence index fell 11% for the month and is down 30% over the past five months as US consumers have grown increasingly pessimistic about the prospects for unemployment and worried about more inflation. Restaurants rely on discretionary spending. When consumers feel stressed they skip dining out and eat at home instead. The U of M survey shows that Trump’s tariff pronouncements, along with the severe reaction of the stock and bond markets, are taking their toll on US consumers.
• To combat high turnover among tipped servers, full-service restaurant operators may want to consider adding earned wage access to their menu of employee benefits, new research commissioned by DailyPay and conducted by The Harris Poll shows. High employee turnover is a major industry pain point. Across the restaurant industry, the average employee tenure is just 110 days, a turnover rate of 41% for front-of-house workers. Earned wage access (EWA) allows employees to draw a portion of their earned wages before their scheduled payday. According to the data, nearly two-thirds (63%) of millennial tipped hourly service industry workers say their overall quality of life and mental health would improve if they had access to their hourly pay when they earned it. Access to EWA even outperformed not being taxed on their tips (60%), having flexible work schedules (60%), or interest rates dropping (36%), according to the poll.

• The restaurant industry is expected to reach $1.5 trillion in sales and add more than 200,000 net new jobs in 2025, bringing total restaurant and foodservice employment to 15.9 million by year-end, according to the National Restaurant Association’s 2025 State of the Restaurant Industry Report. While the challenges facing restaurants in 2024 – including rising labor and food costs and the ongoing struggle to recruit and retain employees – remain, more than 8 in 10 operators expect their 2025 sales to be either higher or about the same as 2024, per the report. Consumers told NRA they’d eat out more frequently if they had the money, a sentiment that cuts across all segments: on-premises dining at table-service restaurants (81%) to visiting quick-service restaurants, snack places, delis or coffee shops (76%) to home delivery (82%). Fine and casual dining establishments are focusing on attracting more in-person diners in 2025.
• Employment by restaurants grew 0.9% in January compared to a year ago while average industry wages rose 5.2% over the same period to $20.40 per hour, according to the latest US Bureau of Labor Statistics data. Rising restaurant payrolls have been supported by rising consumer spending – up 2.7% in February year over year and 0.1% versus January, according to the Bureau of Economic Analysis. But that may be about to change as US consumer sentiment plummets in response to President Trump’s volatile trade war, which threatens to fuel inflation. The University of Michigan said its April consumer confidence reading was lower than anything seen during the Great Recession and was the second-lowest reading on record going back to 1952.