US Accommodation and Food Services Sector NAICS 72

Nov 13, 2025 - Restaurants Under Pressure

• The restaurant industry is feeling the strain as Americans pull back on dining out, The Wall Street Journal reported in November. Restaurant chains, including Wendy’s and Applebee’s, are feeling the pinch as diners increasingly trade down to lower-priced menu items, while price-sensitive consumers, including lower-income patrons and Gen Zers, are dining out less often. Wendy’s reported a 4.7% decline in domestic same-store sales and reduced customer traffic in the third quarter and announced it will close hundreds of its restaurants in the coming months. Meanwhile, Applebee’s CEO told WSJ that rising consumer anxiety is causing diners to be choosier with their spending and hyper-focused on value. Restaurants leaning heavily on value offerings, new menu items, and marketing to drive traffic are faring better. McDonald’s is expanding its value menu offerings and reviving old favorites like the Snack Wrap to keep people coming back.
• The Accommodation & Food Services Sector topped the list of 11 service sectors reporting growth in October, according to the Institute for Supply Management’s Services Purchasing Managers’ Index (PMI). The sector also led the list of industries reporting an increase in business activity and an increase in new orders for the month. Also, of 16 of the 18 services industries reporting an increase in prices paid during October, Accommodation & Food Services again led the pack. Overall, in October, the Services PMI registered a reading of 52.4%, up 2.4% from September's figure of 50%, signifying expansion. Per the Labor Department’s Consumer Price Index (CPI) report for September 2025, the price of lodging away from home, which includes hotels and motels, declined 0.8% year over year and was down 1.8% compared to August, while the price of food away from home rose 3.7% YoY and inched up 0.1% from August.

• A majority of hotel operators are scaling back development plans amid rising costs and softening consumer demand, a new survey conducted by the American Hotel & Lodging Association (AHLA) finds. The survey, conducted in late August, gathered input from nearly 400 hotel property owners and operators nationwide. It found that development and renovation plans remain under pressure, with 32% of respondents delaying projects, 24% scaling back, and 8% canceling projects entirely. Only 8% of property owners/operators reported moving ahead with new investments. Also, nearly half of the respondents (49%) reported being understaffed, underscoring ongoing workforce challenges that add to financial uncertainty. Those polled reported that leisure travel continues to soften, with 30% of hotels seeing declines in completed leisure stays and 26% reporting drops in bookings compared to the same period last year. Business, group, and government travel also showed softness, with 15–17% of properties reporting decreases.
• 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.