In May 2025, spending at U.S. restaurants and bars fell by 0.9%, marking the largest decline since February 2023, when a similar decrease was observed, according to Bloomberg. This drop reflected a wider pullback in retail spending as consumers tightened their budgets across various discretionary categories.In May 2025, spending at U.S. restaurants and bars declined by 0.9%, marking the largest drop since February 2023—when a similar pullback was recorded, according to Bloomberg.
This decrease paralleled a broader retrenchment in retail spending, as consumers pulled back across several discretionary categories.
What’s Driving the Decline?
1. Economic Anxiety Amid Tariffs & Inflation
- Ongoing tariff threats and geopolitical uncertainty have shaken consumer sentiment, prompting people to scale back on discretionary expenses such as dining out.
- The University of Michigan’s consumer sentiment index dropped sharply—hitting its lowest since 1990—matching the period when restaurant spending fell
2. High Debt & Reduced Savings
- U.S. households are burdened by record-high credit-card debt and shrinking savings rates, draining discretionary income and impacting dining-out budgets.
3. Shift Toward Value Restaurants and Groceries
- Consumers are avoiding full-service sit-down meals in favor of fast-casual options or value grocery choices. Chains like Cava and convenience storages such as Casey’s have seen modest growth, while casual eateries like Olive Garden report fewer visits, especially among middle- and lower-income households
Casual dining chains have felt the impact of recent economic challenges. McDonald’s experienced a 3.6% drop in U.S. same-store sales, marking its steepest decline since the pandemic lockdowns, even after introducing value items like a $5 meal deal.
In contrast, other chains such as Chili’s and Texas Roadhouse are managing the downturn more effectively by focusing on affordability and enhancing the dining experience to attract budget-conscious customers.
The National Restaurant Association suggests that the decline seen in May may be temporary, as consumer confidence had fallen for five consecutive months before showing a slight recovery in May. Economists recommend caution when interpreting one-month seasonal data. In unadjusted terms, year-over-year restaurant spending still increased by approximately 6%, supported by population growth and inflation.Casual-dining chains have felt it acutely. McDonald’s saw U.S. same-store sales drop 3.6%—its steepest decline since the pandemic lockdowns—despite adding value items like a $5 meal deal.
Other chains like Chili’s and Texas Roadhouse, however, are navigating the downturn better by emphasizing affordability and experience to attract budget-conscious diners.
The National Restaurant Association notes the May decline may reflect a temporary blip, as consumer confidence dipped for five consecutive months before a slight recovery in May. Economists advise caution interpreting one-month seasonal data. In unadjusted terms, year-over-year restaurant spending still climbed around 6%, bolstered by population growth and inflation.
What to Watch in the Coming Months
- Consumer Confidence & Disposable Income: Continued erosion in sentiment or disposable income could dampen spending further.
- Policy Moves: Talks of tax cuts and diminishing tariff risks may restore consumer willingness to dine out .
- Sector Strategy: Casual-dining chains investing in value, menu optimization, and ambiance upgrades (e.g., Cracker Barrel, Red Lobster) are hoping to regain customer trust
