It’s not your imagination. Restaurants everywhere are feeling the squeeze in 2025. Inflation, cautious spending, and razor-thin margins are putting once-booming brands on shaky ground. From fast-casual stars to classic diners, the numbers are showing just how fragile the industry has become. Here’s a closer look at who’s struggling, what’s driving the decline, and why eating out feels tougher than ever this year.
CAVA’s Growth Hits the Brakes
CAVA has been one of the hottest names in fast casual, but momentum is fading fast. Same-store sales grew just 2.1% in Q2 2025, down from double-digit gains just a few months earlier. The company had to lower its full-year sales forecast, a clear sign that inflation and consumer belt-tightening are finally catching up to them.
Chipotle Sees Traffic Fall Off
Even Chipotle isn’t immune to shrinking budgets. Comparable sales dropped 4%, thanks to fewer transactions, even though average checks were slightly higher. Margins also took a hit, slipping from 28.9% to 27.4%. Customers may love burritos, but they’re thinking twice about the extra guac.
Sweetgreen’s Losses Pile Up
Sweetgreen is serving more red ink than salads in 2025. Same-store sales dropped 7.6%, and losses deepened to $23.3 million in Q2—much worse than the year before. Health-conscious customers are trading down to cheaper options, and the brand is struggling to balance its premium image with price-sensitive diners.
Bloomin’ Brands Shrinks Its Footprint
Casual dining giant Bloomin’ Brands, which owns Outback Steakhouse, Carrabba’s, and Bonefish Grill, is seeing sharp declines. Revenue is down more than 10% year-over-year. Inflation-weary families are skipping sit-down dinners, leaving the company with less traffic and a tougher road ahead.
Denny’s Plans Major Closures
The iconic diner chain is scaling back in 2025. Same-store sales dipped 1.3%, and the company is preparing to shutter 70–90 locations this year. For many budget-conscious families, pancakes at home are starting to look like the cheaper option.
Traffic Slows Across the Industry
It’s not just individual brands—foot traffic is falling everywhere. Industry-wide, visits dropped 1% year-over-year in Q1, with fast food seeing the steepest declines. Growth has slowed to near-zero, showing that Americans are pulling back on dining out across the board.
More Restaurants Closing Their Doors
Behind the headlines are sobering stats: nearly half of all restaurants fail within five years. Independent eateries are hit hardest, with a 17% first-year closure rate. Recent events like the Los Angeles fires have only made survival tougher for smaller operators.
Tipping Drops Along With Confidence
Even tipping is sliding as wallets tighten. The average tip percentage slipped across the board in 2025, from bars to full-service restaurants. Since tips make up nearly a quarter of worker pay, this shift is hitting staff just as hard as it hits owners.
Sales Growth at a Decade Low
The first half of 2025 brought some of the weakest restaurant sales growth in 10 years—worse than even the pandemic years. Inflation-adjusted growth was just 0.8%, despite record-high consumer spending. People are spending more dollars but getting less food, and restaurants aren’t seeing the real benefit.
Profits Squeezed to the Bone
Margins have always been slim in the industry, but rising costs are leaving almost no breathing room. Full-service restaurants operate on just 3–5% profit margins, and fine dining has seen its cushion collapse from 19% to 12%. Even delivery, once a lifeline, is cutting into profits with third-party fees.
Diners Trade Down to Cheaper Options
Operators report a clear shift in behavior: fewer dine-in visits, more takeout, and growing demand for cheaper menu choices. Customers are splitting entrées, skipping extras, and trading casual dining for fast food—or skipping restaurants entirely in favor of eating at home.
Labor Costs Keep Rising
Hiring and keeping staff is still a nightmare. Wages are eating up a bigger share of revenue, and annual turnover remains sky-high. Full-service restaurants are still short more than 200,000 workers compared to pre-pandemic levels, adding even more stress to already thin operations.
Satisfaction Slips at Sit-Down Spots
Customers aren’t just spending less—they’re enjoying the experience less, too. Full-service restaurants saw satisfaction scores dip by 2%, while fast food held steady. When value is king, many diners feel they’re not getting enough bang for their buck in sit-down settings.
Inflation Keeps Menus Under Pressure
From beef and coffee to eggs and cocoa, food costs are climbing steeply. Add in higher labor, rent, and utilities, and restaurants are stuck raising prices—or swallowing losses. With margins so thin, every cost increase hits like a body blow.
Economic Uncertainty Cuts Visits
Consumers are nervous, and it shows in how often they eat out. Middle- and low-income households are cutting back, focusing more on essentials. Potential tariffs on imports like tomatoes are only fueling the anxiety, leaving restaurants with less predictable demand.
Delivery Growth Comes With a Catch
More diners are ordering from home, but it’s not helping profits. Third-party delivery apps take as much as 30% in fees, wiping out earnings. Some restaurants are trying to pivot to first-party delivery to survive, but that comes with its own logistical headaches.
Labor Shortages Aren’t Going Away
The industry’s labor woes aren’t just about wages. High turnover, fewer immigrant workers, and rising training costs are leaving operators scrambling. For many restaurants, finding and keeping reliable staff is as tough as keeping customers.
Tech and AI to the Rescue?
Some chains are betting on robots and AI to bring relief. Chipotle’s “Autocado” and Miso Robotics’ “Flippy” are examples of automation aimed at cutting costs and boosting consistency. Whether these tools can truly offset inflation and staffing woes remains to be seen.
Reinventing Menus and Operations
To survive, many restaurants are doubling down on efficiency. That means optimizing menus, promoting loyalty programs, and streamlining staff schedules. Others are looking to diversify revenue streams with catering, events, or even branded merchandise.
Sustainability as a Selling Point
Eco-conscious practices are also gaining traction. From waste-tracking technology to more plant-based options, restaurants are trying to win over customers who care about sustainability. It’s one more way to connect with diners who want both value and values on their plate.
