The Year of Contradictions in the Restaurant Industry
2025. 2025 is as nuanced a year as brands have ever seen with consumers behaving and setting expectations in opposing ways. Brands that will thrive are those who embrace these contradictions as opportunities. With consumer behavior evolving at a rapid pace, brands looking to build momentum for the rest of the year must take advantage of these insights. This year has been defined by paradoxes—where diners crave both digital convenience and personal connection, indulgence and thrift, and personalization and privacy. The restaurants that thrive will be those that embrace these contradictions as opportunities. At the heart of this balancing act is the evolving consumer mindset—seeking balance and growth in a rapidly changing world, prioritizing both physical and mental well-being, financial security, and meaningful connections. For restaurants, success lies in recognizing these evolving preferences and strategically adapting operations to meet them. Consumers live in a world where digital connection is both an escape and an expectation. With social media shaping trends, culture and commerce around the clock, younger generations are increasingly using these platforms to discover new dining experiences. A growing majority of Gen Z now turns to TikTok as their go-to search tool over traditional search engines. This shift highlights the growing reliance on social media for information, making it crucial for restaurants to engage with this audience where they are. However, as digital habits shift, so does consumer trust. Younger generations are becoming more discerning, placing greater trust in organic content from peers over traditional influencer promotions, making authenticity the priority. For restaurants, this means that engaging customers through organic content, such as authentic reviews or behind-the-scenes posts, may resonate more than traditional influencer-driven campaigns alone. At the same time, many are feeling the strain of digital overload. Two-thirds of Gen Z and Millennials admit to spending more time online than they’d like, driving a desire for balance between online and in-person connections. As a result, experiential marketing continues to gain traction, with 71 percent of 13- to 39-year-olds seeking immersive brand activations that offer real-world engagement. For restaurants, this presents an opportunity to create in-person experiences that satisfy the craving for authenticity and connection…
The Most Innovative Companies in Restaurants, Dining & Food Service
2025. Five years ago, a global pandemic upended restaurants. Now, the business of dining is focused on the future, introducing new experiences, new technology, and new models that challenge our notion of what makes a restaurant – a restaurant. Restaurant chains are giving diners more of what they want—and need. Fast-casual Mediterranean chain Cava is revamping its restaurant dining rooms to encourage face-to-face connection. Wingstop, the chicken wing concept with more than 2,000 restaurants, rebuilt its entire tech stack in-house to claim complete control of its customer data while simultaneously giving guests the chance to “hyper-personalize” wing orders. Tempe, Arizona-based Salad and Go scaled its cost-saving centralized labor and kitchen model, opening a massive Texas facility that’s able to support hundreds of restaurants; diners in Arizona, Texas, Oklahoma, and Nevada can order salads in the drive-through for $8 or less. And Dig took its vegetable-forward meals to new heights via a JetBlue partnership, developing delicious, nutritious, and well-received onboard meals, best served cold. Outside a traditional restaurant’s four walls, Wonder built a vertically integrated restaurant delivery business featuring high-quality food from top-name chefs (including Bobby Flay and José Andrés ) and restaurants, with plans to fix all food delivery after a $650 million acquisition of Grubhub. Resident rethinks the restaurant experience, throwing excellent dinner parties staffed by award-winning pro chefs for private clients and the food-loving public; its 2024 acquisition of Privado, which builds event-management software, helped Resident make swanky private events as easy to book as a restaurant reservation. And on the lower end, Smoodi introduced a countertop smoothie-making vending machine able to blend custom drinks in hospitals, convenience stores, dining halls, and more. Good restaurant experiences need great technology. Blackbird Labs built a loyalty platform on the blockchain, encouraging diners to patronize—and get rewarded by—their favorite local restaurants. And kiosks with software from Bite give guests at quick-service and fast-casual restaurants that hospitable “surprise and delight” feeling, even when they’re ordering on a touchscreen.
Bielat Santore & Company – Restaurant Industry Alert
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More Consumers Are Trimming Their Restaurant Budgets Than Last Year
New data shows that 33.4% of U.S. households are actively reining in their discretionary spending. Consumer sentiment fell again in March, after sliding nearly 10% in February, according to the University of Michigan’s latest index released Friday. March numbers measuring consumers’ outlook dropped to 57.9, from 64.7 in February, marking the lowest level since November 2022. The decrease was unanimous across age and income demographics as concerns mount over persistent inflation and a slumping stock market. Wall Street tumbled 10% below its record this week, marking its first correction since 2023 as a trade war with Europe and the threat of tariffs escalated. A shaky consumer isn’t great for the restaurant industry, which is largely reliant on discretionary spending, especially as the pricing gap continues to find favor at the grocery store. Perhaps of no surprise, February’s traffic for the quick-service segment was down 2.8% year-over-year, according to Revenue Management Solutions data. In a new “Restaurant Outlook 2025” report from data/research consultancy firm Big Chalk, the first half of this year looks to be much more challenged for the restaurant industry than it was heading into the year, when there was a sense of cautious optimism. Big Chalk measures activity from the “trade-off consumer,” or those who are actively trimming their budgets in at least four out of seven tracked categories: housing, auto expenses, leisure travel, clothing, movies, groceries, and out-of-home dining. The trade-off consumer now constitutes 33.4% of U.S. households, versus 28.5% in June. According to Big Chalk’s head of sales and marketing effectiveness Rick Miller, this trend also appears to be impacting all age and income demographics. “Trade-off consumers are driven by discretionary income, so a person earning $100,000 a year would not be called low-income, but if they have a $3,000 monthly mortgage and $700 car payment, they might still be in a tough position with their monthly discretionary budget,” he said. Miller outlines several quantifiable data points driving a dampened outlook, including…
Menu Prices Register Their Highest Sequential Increase In Nearly Two Years
Restaurant prices rose 0.4% month-over-month. The Consumer Price Index report for February increased 2.8% year-over-year, compared to 3% in January, showing signs of cooling and driven largely by a 4% drop in airline fares. Despite significant increases in egg prices (up nearly 60% year-over-year) driven by the ongoing outbreak of bird flu, the pace of food inflation overall was up 0.2% month-over-month in February, versus 0.4% in January, and 0.3% in December, according to Wednesday’s report from the Bureau of Labor Statistics. Compared to February 2024, the food category overall was up 2.6%, with food-away-from home (restaurants) up 3.7% year-over-year and food-at-home (grocery/supermarket) prices up 1.9% year-over-year. Month-over-month, menu prices rose 0.4% — their sharpest increase since June — while grocery prices were flat. Compared to February 2024, limited-service menu prices are up 3.5%, while full-service menu prices are up 3.7%. While the overall inflationary index eased in February, Mark Kalinowski, CEO and founder of Kalinowski Equity Research, notes that restaurant pricing in February marked the largest sequential month-over-month rise since March 2023 and widened the gap with grocery/supermarket. In a note, he said that gap was 180 basis points in favor of grocery pricing in February, compared to the historical average of about 70 basis points. Further, the 3.7% year-over-year increase for menu pricing is about 30 basis points higher than the 23-year historical average of 3.4%. According to the National Restaurant Association, the West region experienced the highest menu price growth in February, with a 4.3% year-over-year jump. The Midwest experienced the slowest rate, at 3.2% year-over-year, while the Northeast and South experienced more moderate increases, up 3.6% and 3.4%, respectively…
Are Dog Park Bars the Next Big Hospitality Trend?
These concepts are having fun with creative drink programs. A growing segment you may not have heard of? Off-leash dog park bars, likely coming soon to a city near you. The logistics of operating this kind of concept aren’t without challenges—from hiring specialists to make sure dog fights don’t break out to careful restaurant design and ensuring sanitary conditions—but the obvious upside is, you get to see puppies all day, and the market keeps demanding more. The pet industry is poised to balloon from $320 billion in 2023 to almost $500 billion by 2030, according to a report from Bloomberg Intelligence. The U.S. alone is positioned, the report found, to approach $200 billion by the end of the decade. Though the majority of dog park bars across the country are mom-and-pop shops, there are a few brands trying to tap into the massive market and emerge as leaders in the space. Take MUTTS Canine Cantina, for example, a Texas-based brand that partnered with Fransmart in 2019 to start expanding. College roommates Kyle Noonan and Josh Sepkowitz founded the concept in 2012, where customers can sip a cocktail and let their pups off the leash to run around in the attached doggy park. The brand leans into the dog puns, from offering “barktastic” treats for pups on the “Woof Menu” to the beverage menu; the Barkarita features 100 percent Agave tequila, premium orange liqueur, and fresh lemon and lime juice. Ranch Waters, a Texas Mule with bourbon, and a variety of frozen cocktails round out the offerings. With open locations in Texas including Austin, Dallas, El Paso, and Fort Worth, MUTTS inked a franchise agreement in 2022 to expand to Arizona with six locations, and also has plans to branch into Denver and Kansas City. Florida was one of the first states to allow dogs in outdoor dining spaces in 2006. As of 2023, there were 23 states that allow dogs in outdoor patio areas of restaurants by state law. Unless it’s a service animal, dogs are not allowed wherever food is served, which means dog bar concepts that want to serve food either need a separate indoor area for humans only, or to have outdoor seating, which is the model MUTTs chose—but that also limits potential markets to warmer, more temperate climates…
Restaurants Brace for Tariff Fallout
Is the foodservice industry caught in the crossfire? Looming tariffs are threatening to drive up costs and disrupt supply chains for restaurants already navigating a volatile economic landscape. The U.S. and European Union trade battle escalated Thursday after President Donald Trump threatened a 200 percent tariff on European alcohol in response to the E.U.’s new duties on American spirits. The E.U.’s move came just a day after Trump’s steel and aluminum tariffs took effect, underscoring how quickly trade disputes can spiral and send stocks tumbling as businesses brace for further uncertainty. The latest tariff threat is just one piece of a rapidly shifting landscape of trade policies, delays, and retaliatory measures. Since February, Trump has imposed and adjusted tariffs on major trading partners, including Canada, Mexico, and China, while introducing a broader “reciprocal” tariff plan aimed at aligning U.S. duties with those of other nations. A Look at Recent Trade Moves
- February 1: Trump signs an executive order imposing tariffs on imports—10 percent on Chinese goods and 25 percent on Mexican and Canadian products, set to start February 4.
- February 3-6: The administration briefly pauses tariffs on Mexico and Canada but moves forward with levies on Chinese imports, prompting swift retaliation.
- February 10: Trump hikes steel and aluminum tariffs, with the new rates set to take effect in March.
- March 4-6: The U.S. enforces 25 percent tariffs on imports from Canada and Mexico but grants temporary exemptions for certain goods, including goods for automakers as well as food and beverage products, like avocados and beef.
- March 10-12: China strikes back with tariffs on American agricultural products like pork, soybeans, and beef. The E.U. follows with duties on U.S. farm goods, spirits, textiles, and appliances, affecting $28 billion in trade.
What It Means for Restaurants…
Here Are the Pizza Trends Bubbling Up in 2025
The pickles and hot honey dominating 2024 pies are making room for different toppings this year. Pizza concepts went crazy for pickles and hot honey in 2024, with both those topping choices growing year over year, according to Technomic Ignite menu data. But what will be the hot toppers of 2025? Expect to see other briny and fermented toppings follow pickles’ lead, notes The State of the Pizza Nation 2025 report released by AK Crust ahead of the International Pizza Expo next week in Las Vegas. While pickles will retain their popularity, olives, kimchi, and sauerkraut are ready for prime time. It’s not uncommon for pizza customers to order a salad on the side or to share with the table, but salad-topped pizzas can meet both cravings. Caesar salad-inspired pies featuring romaine, croutons, lemon, and fresh basil are in the forecast, along with pizzas topped with tomato, cucumber, onion, feta, olives, and oregano in the style of a Greek salad. While both of these sound pretty mainstream, some more obscure topping ingredients may be in the offing. Blueberries, cranberries, and raspberries are being added for flavor and texture contrast to rich cheeses and spicy meats. “Foodies are treating pizzas like grazing boards,” said the report. Indeed, Pizza Hut, a chain squarely in the mainstream, introduced Pizza Charcuterie for Pi Day on March 14. Operators are also exploring sausages beyond the sweet and hot Italian variety. “Alternative sausage” toppings include bratwurst, curried sausage, chorizo and ‘nduja, a spreadable spicy sausage from the Calabria region of Italy. On the crust side, sourdough is rising as a pizza crust ingredient. Technomic cites sourdough as the fastest growing pizza ingredient, surging 64.3% in menu mentions year over year. People are also looking for more crunch in their crust, with cheese baked into the edges of the dough more often providing that extra crispness. Cheddar is becoming the cheese of choice to create those encrusted crispy edges. But mozzarella and pepperoni are not getting thrown to the sidelines any time soon. Technomic reports that mozzarella tops 39% of pizzas and pepperoni, a bit over 20%. And pizza as a menu item is certainly holding its own, showing up on 35% of menus in Technomic’s database of 8,500-plus operators…
Did You Know?
The Cost Advantage of the Right Purchasing Partnerships. Everyone in the food industry is feeling the pinch of the economy with reduced consumer patronage in restaurants and even a reduction of produce consumption in the winter months. This makes business tight causing a hard look at any extra costs. One of those costs is with partnering services, with many food service operators relying on purchasing groups to help them make category-specific strategic purchases. There is a great advantage to that because you are adding in a team of experts in the category to help you connect to the growers with produce that fits the operation’s exact needs. There are many areas where we have seen food service operators benefit! This is a cost that can translate to a benefit, but still is a cost that has to be carefully considered!…
Employee Tip
Yes, Chef,’ You Say? Restaurant Workers Have Feelings About That. As a young pastry cook at Eleven Madison Park, Genie Kwon grew accustomed to a kitchen tradition: Every time the chef shouted out an order, the other cooks responded in unison, “Oui, chef!” Or as you may have heard it on the FX show “The Bear”: “Yes, chef!” For a long time, Ms. Kwon, who co-owns the Filipino restaurant Kasama in Chicago, associated the phrase with the unyielding hierarchy of the kitchen at Eleven Madison Park, known for its exacting vision of fine dining.…
