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At a glance
Across the board, restaurants and hospitality companies face
greater scrutiny from consumers over whether they want to spend
their money. More than 4 in 10 consumers say they feel significant
financial anxiety. Shifting lifestyles are influencing how often
they travel and dine out.
While a third of consumers say they are reducing restaurant
spending due to financial constraints, nearly 70% report cutting
back for other reasons. Many feel the quality of food isn’t
there for the price. Some are happy to pay more despite a tight
budget to get the experience they desire, cutting back on frequency
even when they aren’t trading down.
While travelers are also cutting back on the frequency of trips,
they continue to value quality and comfort when they do spend,
fueling strong performance in the luxury segment. High-end hotel
groups such as Four Seasons and Aman are seeing robust demand,
while budget and midscale properties—often reliant on
cost-conscious leisure guests and business travel—face more
uneven results.
This bifurcation underscores a broader trend: consumers are
prioritizing experiences over goods, with a clear preference for
premium stays and memorable meals, even as overall travel and
dining volumes soften.
To adapt, brands are leaning on menu innovation, sharpened value
platforms, digital engagement, third-party delivery, and refreshed
service models. Investments in staff—whether through
training, scheduling, or added support—are also proving
critical, as stronger service can enhance guest satisfaction and
reinforce overall value.
While challenges remain, recent earnings illustrate that those
who evolve quickly—balancing value, experience, and
operational discipline—are well-positioned to capture loyalty
and growth in a shifting landscape.
At the same time, cost pressures from commodities and labor
remain significant. Margins are thin, and the future state of the
consumer is opaque. Operators have their work cut out for them.
Seven in 10 operators report high disruption since 2023 and
worry about inflation and regulatory or policy changes in the
near-term, but many are concerned they cannot adapt fast enough,
primarily due to uncertain or volatile consumer demand, existing
business challenges, and a lack of human capital.
Restaurants are the top target for discretionary cutbacks
The consumer is only willing to spend more for a
“worth-it” experience. A lack of perceived value is both
a reason to ditch a night out, and an opportunity for operators who
can deliver a meaningful experience to customers. As it stands,
travel seems more inured to cutbacks than retail, leisure, and
restaurant spending.
Of course, customer touchpoints—service— come down
to talent, 33% of whom reported that “insufficient staffing
and a large workload” was a significant problem in 2025, a
jump of 18 percentage points. On the upside though, 79% of workers
see equal opportunity for career advancement at their company.
The underlying story is one of a shift: operators know they need
to innovate around service and their value proposition, while
consumers don’t want to trade down; they want to save their
money for an experience that really counts.
Here we highlight key dynamics from our operator,
worker, and consumer surveys, and look at what the industry needs
to do in response.
Consumer insights
Financial anxiety is at a record high, with 42% of consumers
saying they are “very” or “extremely” worried
about their financial health. The number one tactic for reducing
debt load? Cutting experiential spending.
Retail, for example, has held up better in 2025 when consumers
who intended to cut back were asked which discretionary sectors
they would target, and grocery spending is a non-negotiable for
two-thirds of respondents. Travel also fared well, with just 34% of
cost-cutters intending to snip spending, while restaurants were the
top target.
While consumers are reducing restaurant spending due to
financial constraints, it’s not just about debt. Nearly 70%
report cutting back for other reasons: lack of value and a
preference for home cooking are top motives—the consumer
price index for food at home rose 2.2% year-over-year in July, while that
for food away from home increased by 3.9%. No wonder then that 40%
of respondents said they could make better food in their own
kitchen.
49%
Of consumers deem price is now too expensive for the value
offered at restaurants
Consumers who are very or extremely concerned regarding
financial health
This has hurt limited-service operators. Even typically strong
performers such as Chipotle (comparable restaurant sales down 4% year-over-year in the second quarter)
and Wingstop (1.9% YOY decline in domestic same store sales)
have not been immune to the challenges of consumer behavior, cited
by Wingstop CEO Michael Skipworth as “concerns about elevated
prices, future job prospects and general anxiety about the
future.”
On the other hand, there are bright spots in the casual dining
space, with Chili’s figuring out the recipe for value and
experience. As CEO Kevin Hochman recently said in an earnings call,
“It is very difficult for [competitors] to replicate the total
value proposition given the amount of time and investment we have
put into improving the experience.”
The overall trend toward prioritizing experiences has not
changed: while debt loads are greater, a higher share of consumers
say that reducing dining visits is a top strategy (78%, up from 75%
in 2024) while eating at cheaper restaurants continues to be one of
the least-attractive strategies (cited by 32%, down from 36% last
year).
Aside from the wallet crunch, we see a gap between consumer
desire for a worthwhile dining experience and the value they
receive. Post-pandemic, restaurants are competing with at-home
meals and battling the effects of high inflation and price
pass-through on consumer sentiment. Tellingly, fine-dining and
coffee-focused restaurants score highest on perceived value,
suggesting that cheaper or faster aren’t what wins over
today’s consumer.
Nearly 80% of consumers say restaurant brands can entice them to
increase visits. They say they are most susceptible to better food
quality (the top tactic, cited by 57%) and better menu pricing
(cited by just over half). Menu engineering is now the top
recommendation for operators to thwart rising cost pressures in
lieu of passing on pricing to consumers.
The analog for travel versus the pandemic-tested
“staycation” is more protective of hotel services, which
some consumers equate with wellness, but again, there is a
focus on quality of experience. Our 2025 Global Consumer Outlook
found that younger consumers were ready to spend more (if on a
smaller budget), while 31% of highincome consumers expected to
increase their spending in 2025, particularly on travel and
leisure.
The catch is that premium experiences can’t be
merely premium-ish. They need to deliver the goods.
Consumers are more interested in traveling, especially air and
road travel
Net more interest change this year vs. last year
Operator insights
Nine in 10 operators expect to shift their business model over
the next three years, led by product or portfolio, but only half
believe their current pace of change is fast enough to achieve
their goals—a decline from prior years.
The wider macroeconomic turbulence is crystallized in
uncertainty over consumer demand six or twelve months from now.
“Falling, volatile, or uncertain consumer demand” was the
most commonly stated obstacle to business change, felt by 42% of
respondents. Around 85% of operators think their company should
invest more time and resources in product offering and go-to-market
strategy, but those changes are difficult when you don’t know
what people’s appetite will be.
Companies know what they need to adapt… but change is
slow
Top three obstacles to business model
change
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