The restaurant and bar industry continues to face challenges and opportunities as it navigates a complex economic landscape in early 2025. According to the National Restaurant Association's latest State of the Industry report released this week, restaurant sales are projected to reach $1.5 trillion this year, representing a modest 0.3% growth in real terms compared to 2024.
Employment in the sector is expected to grow by 200,000 jobs to reach 15.9 million workers. However, staffing remains a persistent challenge, with table-service restaurants still 233,000 positions below pre-pandemic employment levels.
Rising costs continue to squeeze profit margins. The NRA report found that 95% of operators cite food costs as a major challenge, while 96% point to labor costs as a top concern. In response, over half of restaurants added new deals or value promotions in 2024, with 47% planning to do so again in 2025.
Consumer behavior is shifting, with 81% of diners saying they would eat at full-service restaurants more often if they had more disposable income. This pent-up demand is driving many operators to prioritize on-premise dining experiences. The NRA found that 90% of fine dining and 87% of casual dining operators see growing dine-in traffic as key to success in 2025.
Supply chain disruptions remain an ongoing issue. Egg shortages are expected to persist due to avian flu outbreaks, while cocoa supplies face pressure from weather events and labor issues in West Africa. Some candy makers are adjusting product lines in response to higher chocolate costs.
Technology adoption continues to accelerate. The NRA reports growing interest in AI-driven platforms for waste tracking, demand forecasting, and inventory management. Meanwhile, delivery apps remain a double-edged sword, with high commission fees cutting into already thin margins.
Looking ahead, restaurants face an uncertain economic outlook. While a strong labor market and potential interest rate cuts could support growth, rising household debt and geopolitical tensions pose downside risks. Operators are focused on building resilience through menu innovation, operational efficiencies, and enhanced dine-in experiences as they navigate the challenges ahead in 2025.
This content was created in partnership and with the help of Artificial Intelligence AI
