Restaurants: Full-service restaurant uncertainty: Why diners are trading up and down

Why it is the topic trending:

• Contradictory Consumer Behavior: The full-service restaurant sector is experiencing a paradox where consumers are pulling back on spending generally, yet are still willing to spend big for special occasions or premium options.

• Macroeconomic Uncertainty and Pullback: Concerns about consumer spending habits and the broader economy, including anticipated impacts of fresh tariffs, are significant discussion points in the restaurant industry.

• Divergent Performance Across the Sector: While some full-service restaurants, including major chains, are facing challenges like declining sales and store closures, others, particularly in fine dining and suburban casual, are showing resilience or even growth.

• Shifting Dining Occasions: Consumers appear to be concentrating their restaurant visits on weekends and special occasions, impacting weekday traffic for many establishments.

• Adaptation to Digital-First Diners: The rise of consumers who prioritize digital engagement is influencing how full-service restaurants are trying to attract and retain customers.

Overview:

The full-service restaurant sector is navigating a period of uncertainty characterized by contradictory consumer behaviors. While overall consumer spending seems to be retracting due to macroeconomic factors, some segments, like fine dining catering to special occasions and suburban casual restaurants with restrained pricing, are holding steady or even seeing growth. Conversely, many casual dining chains are struggling with declining sales and are exploring strategies like digital engagement and loyalty programs to combat consumer price sensitivity and tepid traffic. This mixed landscape highlights the challenges and adaptations occurring within the full-service restaurant industry as it responds to a turbulent market.

Detailed Findings:

• Consumer Pullback Amid Uncertainty: The National Restaurant Association Show highlighted concerns about consumer spending and macroeconomic challenges.

• Non-Universal Impact in 2025: Despite concerns, some restaurants across different sectors and price points have achieved same-store sales growth.

• Strange Signals in Full-Service Dining: The full-service sector exhibits peculiar consumer signals, with a return to on-premise and group dining potentially offsetting trade-down trends.

• Contrasting Performance within Full-Service: Many full-service chains are closing stores or facing bankruptcy, while others are performing well.

• Fine Dining Resilience for Special Occasions: Some fine dining restaurants have avoided significant trade-down, with clientele primarily visiting for special occasions.

• Weekend Dining Preference: Consumers across various restaurant types are shifting their dining out occasions to the weekend.

• Premium Options Despite Reduced Consumption: While consumers might be eating less (potentially due to GLP-1 drugs), they are opting for higher-quality, premium food and beverage items.

• Emphasis on On-Premise Experience in Fine Dining: Fine dining establishments are focusing on providing a comprehensive and high-quality on-premise experience to justify premium pricing.

• Suburban Casual Performing Better: Suburban full-service restaurants have seen positive performance in early 2025, while downtown locations might be struggling more.

• Trade-Down in Casual Dining: In more casual settings, consumers are opting for less expensive menu items like pizza and hamburgers over steaks and craft cocktails.

• Casual Dining Brands Turning to Digital Engagement: Chains like Applebee’s are focusing on digital channels and overhauling loyalty programs to combat sales slumps.

• Value Plays and Promotions in Casual Dining: Despite various value promotions like the Dollarita, some casual dining brands continue to experience tepid sales.

• Geographical Overlap in Loyalty Program Partnerships: Applebee’s partnership with Wyndham Hotels leverages a significant geographical overlap between their locations.

• Focus on Value Perception: Deals like Applebee’s 2-for-$25 meal aim to improve the value perception for guests facing economic uncertainty.

Key success factors of product (trend):

• Catering to Special Occasions: Restaurants positioned for celebratory dining tend to maintain business despite broader spending cautiousness.

• Offering High-Quality, Premium Options: Consumers willing to dine out are often opting for better quality food and beverages.

• Providing a Comprehensive On-Premise Experience: For higher-priced restaurants, exceptional service and ambiance are crucial.

• Restrained Pricing in Casual Settings: Maintaining affordable price points for core menu items can attract consumers trading down from more expensive options.

• Effective Digital Engagement and Loyalty Programs: Utilizing digital channels to connect with loyal customers and offer value-driven promotions can drive traffic and sales.

• Strategic Partnerships for Value and Convenience: Collaborations that offer added value or convenience, like loyalty program integrations, can attract and retain customers.

Key Takeaway:

The full-service restaurant sector is currently characterized by a bifurcated market where fine dining and some suburban casual establishments are holding up due to specific consumer behaviors, while many casual dining chains are facing challenges and turning to digital strategies and value offerings to navigate economic uncertainty and shifting customer preferences.

Main Trend:

The Divergent Dining Landscape in Full-Service Restaurants.

Description:

Trading Up and Down: Navigating Uncertainty in Full-Service Dining describes the current complex and contradictory trends within the full-service restaurant industry. While some segments are experiencing a consumer pullback due to economic pressures, others, particularly those catering to special occasions or offering premium experiences, are seeing continued spending. Meanwhile, many casual dining brands are struggling to maintain sales and are adapting their strategies through digital engagement and value-focused promotions. This trend highlights the uneven impact of economic uncertainty on different tiers of the full-service sector and the varied approaches restaurants are taking to navigate a dynamic market.

What is consumer motivation:

• Prioritizing Spending on Special Occasions: Consumers are still willing to allocate funds for memorable dining experiences during celebrations or significant events.

• Seeking High-Quality Indulgence: When dining out, some consumers are opting for better quality food and beverages as a treat.

• Value for Money in Everyday Dining: For more routine dining occasions, consumers are becoming more price-sensitive and seeking good value.

• Convenience of On-Premise Dining: Despite digital advancements, there remains a desire for the experience of dining in a restaurant setting.

• Loyalty Rewards and Incentives: Consumers are attracted to loyalty programs and promotions that offer rewards and discounts.

• Seamless Integration of Digital and Physical Experiences: Consumers appreciate brands that offer a cohesive and convenient experience across digital and physical channels.

What is driving trend:

• Macroeconomic Uncertainty and Inflation: Concerns about the economy and rising prices are influencing consumer spending habits.

• Return to On-Premise Dining: After pandemic-related shifts, there's a resurgence in consumers wanting to dine at restaurants.

• Rise of Digital-First Consumers: An increasing number of diners prefer to interact with restaurants through digital platforms for ordering, loyalty programs, and information.

• Impact of GLP-1 Medications: The potential appetite-suppressing effects of these drugs might be influencing overall food consumption.

• Competition from Other Restaurant Sectors: Full-service restaurants face competition from fast-casual, quick-service, and off-premise dining options.

• Increased Operational Costs: Restaurants are dealing with rising costs for labor, food, and other operating expenses.

What is motivation beyond the trend:

• Socialization and Connection: Restaurants serve as important spaces for social gatherings and connecting with friends and family.

• Experiencing Different Cuisines and Ambiances: Dining out provides an opportunity to try new foods and enjoy different restaurant atmospheres.

• Avoiding Cooking and Meal Preparation: Convenience remains a strong motivator for choosing to eat at restaurants.

• Supporting Local Businesses: Some consumers are motivated to dine at local establishments to support their community.

• Seeking Entertainment and Escape: Dining out can be a form of entertainment and a way to escape daily routines.

Description of consumers article is referring to:

• Who are the consumers article refers to from article: The article refers to a broad range of consumers who dine at full-service restaurants, from those who frequent fine dining establishments for special occasions to those who opt for more casual options for regular meals. It also specifically mentions the behavior of loyalty program members at chains like Applebee's.

• Who are them: They are individuals with varying income levels and dining preferences. Some prioritize high-quality experiences for special events, while others are more budget-conscious in their everyday dining choices. Many are also increasingly interacting with restaurants through digital platforms.

• What kind of products they like: They appreciate high-quality food and beverages that align with their expectations for the type of restaurant they are visiting. They also value good service and a positive dining experience. In more casual settings, they look for value for money and familiar menu items.

• What is their age?: The demographic likely spans across various age groups, from younger individuals frequenting casual spots to older patrons of fine dining. The focus on digital engagement suggests a significant portion are likely younger to middle-aged adults.

• What is their gender?: The article does not focus on gender-specific preferences, implying the trends are relevant across genders.

• What is their income?: Consumers dining at fine dining restaurants likely have higher disposable incomes. Those opting for casual dining might have a broader income range, with increasing price sensitivity among some segments.

• What is their lifestyle: They have lifestyles that include dining out, whether for special occasions, regular meals, or social gatherings. Many are likely busy individuals who appreciate the convenience of restaurants.

• What are their category article is referring shopping preferences: They make choices based on occasion (special vs. regular), price point, perceived value, and the overall dining experience. Loyalty programs and digital engagement can also influence their decisions.

• are they low, occasional or frequent category shoppers: This varies greatly depending on the consumer segment. Some might be frequent diners at casual establishments, while others might only visit fine dining restaurants for special occasions. Moderate frequency across different types of full-service restaurants is likely common.

• What are their general shopping preferences-how they shop products, shopping motivations): They are influenced by factors like price, quality, convenience, and brand loyalty. They may seek out deals and promotions, and their choices are often driven by their specific needs and occasions for dining out.

Conclusions:

The full-service restaurant sector is facing a complex and uncertain landscape marked by divergent consumer behaviors. While some areas are showing resilience based on occasion-driven spending and premiumization, others are experiencing a pullback and focusing on value and digital engagement. Navigating this environment requires a nuanced understanding of consumer motivations and a willingness to adapt strategies to meet the diverse needs of today's diners.

Implications for brands:

• Understand Diverse Consumer Needs: Recognize the different motivations and spending habits of consumers in various full-service segments.

• Tailor Offerings to Specific Occasions: Consider developing menus and promotions that cater to special occasions and weekend dining.

• Emphasize Value and Affordability in Casual Dining: Focus on providing good value for money and potentially highlight more budget-friendly menu options.

• Enhance the On-Premise Experience for Premium Dining: Invest in service, ambiance, and high-quality food and beverages to justify higher price points.

• Strengthen Digital Engagement and Loyalty Programs: Utilize digital channels to connect with customers, offer personalized rewards, and drive repeat business.

• Monitor Consumer Spending and Trade-Down Behavior: Continuously track sales data and customer feedback to identify and respond to shifts in spending patterns.

Implication for society:

• Potential Shift in Dining Habits: The trend could indicate a broader societal shift in how and when people choose to dine at full-service restaurants.

• Impact on the Restaurant Industry Workforce: Fluctuations in restaurant performance could affect employment levels and job security in the sector.

• Evolution of Restaurant Business Models: Restaurants may need to adapt their business models to better align with changing consumer demands and economic realities.

• Considerations for Food Security and Access: Economic pressures on the restaurant industry can have broader implications for food accessibility and affordability.

Implications for consumers:

• More Emphasis on Value and Deals: Consumers may increasingly seek out promotions and discounts when dining at full-service restaurants.

• Potential for Fewer Dining Options in Certain Segments: Store closures and bankruptcies could lead to fewer choices in some areas.

• Increased Importance of Loyalty Programs: Consumers may find greater value in participating in restaurant loyalty programs to save money.

• Possible Trade-Offs Between Price and Quality: Consumers might need to make more conscious choices about balancing cost and the quality of their dining experience.

Implication for Future:

• Continued Volatility in the Full-Service Sector: The uncertainty and divergent trends are likely to persist in the near future.

• Greater Divide Between Premium and Value-Oriented Dining: The gap between high-end and budget-friendly full-service options might widen.

• Increased Focus on Operational Efficiency: Restaurants will likely continue to look for ways to optimize operations and manage costs effectively.

• The Role of Technology Will Continue to Grow: Digital platforms and technology will play an increasingly vital role in how full-service restaurants interact with customers.

Consumer Trend:

Occasion-Driven Dining with Value Sensitivity: Consumers are becoming more selective about their full-service restaurant visits, prioritizing spending on special occasions while demonstrating greater price sensitivity for regular dining experiences.

Consumer Sub Trend:

Digital Loyalty for Dining Value: Consumers are increasingly engaging with restaurant loyalty programs and digital platforms to access deals, rewards, and a better perceived value for their spending.

Big Social Trend:

Economic Uncertainty Shaping Consumption Patterns: Broader macroeconomic conditions and concerns about personal finances are significantly influencing how consumers choose to spend on non-essential items like dining out.

Worldwide Social Trend:

Global Shift Towards Value Consciousness: Economic pressures around the world are leading consumers to be more mindful of their spending and to seek out value in their purchases, including dining.

Social Drive:

Seeking Memorable Experiences within Budget Constraints: Consumers aim to enjoy dining out, especially for significant events, but are also increasingly conscious of managing their spending in the face of economic uncertainty.

Learnings for brands to use in 2025:

• Offer Clear Value Propositions: Ensure that menu items and promotions clearly communicate the value for the price, especially in the current economic climate.

• Personalize Loyalty Program Rewards: Leverage data from loyalty programs to offer targeted and relevant rewards that resonate with individual customer preferences.

• Optimize Menus for Profitability and Perceived Value: Strategically design menus that balance profitability with options that consumers perceive as being fairly priced.

• Enhance Digital Communication and Engagement: Utilize digital channels to effectively communicate promotions, loyalty benefits, and build relationships with customers.

• Monitor Local Economic Conditions and Adjust Strategies Accordingly: Be aware of economic trends in their specific operating areas and adapt their offerings and pricing as needed.

Strategy Recommendations for brands to follow in 2025:

• Develop Tiered Menu Options: Offer a range of price points to cater to both budget-conscious diners and those seeking premium experiences.

• Implement Dynamic Pricing Strategies: Consider adjusting pricing based on day of the week, time of day, and demand to optimize revenue and traffic.

• Strengthen Partnerships with Third-Party Delivery and Loyalty Platforms: Maximize reach and engagement through collaborations with established digital platforms.

• Invest in Data Analytics to Understand Customer Behavior: Utilize data to gain deeper insights into customer spending patterns and preferences to inform marketing and menu decisions.

• Focus on Operational Efficiencies to Manage Costs: Streamline operations to control costs and potentially offer more competitive pricing to consumers.

Final sentence (key concept) describing main trend from article (which is a summary of all trends specified), and what brands & companies should do in 2025 to benefit from trend and how to do it.

The core trend is the Emergence of a Dichotomous Full-Service Dining Market, where occasion-based premium spending coexists with value-sensitive regular dining, necessitating that brands strategically cater to both ends of this spectrum by offering targeted experiences, optimizing value perceptions through digital engagement and promotions, and closely monitoring evolving consumer economic realities to ensure relevance and profitability in 2025.

Final Note:

• Core Trend: Divergent Spending in Full-Service Restaurants: Consumers are both trading up for special occasions and trading down for regular dining.

• Core Strategy: Cater to Value and Premium Segments: Restaurants need to strategically address both price-sensitive and experience-focused diners.

• Core Industry Trend: Navigating Macroeconomic Uncertainty: The restaurant industry is significantly impacted by broader economic conditions and consumer confidence.

• Core Consumer Motivation: Seeking Value and Memorable Experiences: Consumers want good value for everyday meals and are willing to spend more for special occasion dining.

Core Trend Detailed:

The core trend highlights the increasing polarization of consumer spending within the full-service restaurant sector. On one hand, there's a willingness among consumers to spend generously for special occasions, prioritizing memorable experiences and often opting for premium food and beverage options. On the other hand, for more regular dining instances, there's a noticeable price sensitivity, with consumers trading down to more affordable menu items and seeking value-driven options. This duality reflects the current economic uncertainty and its impact on consumer discretionary spending, forcing restaurants to cater to two distinct sets of motivations and preferences within their customer base.

Key Characteristics of the Core trend:

• Occasion-Based Premium Spending: Consumers allocate budget for high-quality dining experiences during celebrations and special events.

• Value Sensitivity in Regular Dining: For everyday meals, price becomes a more significant factor in consumer choices.

• Shift to Weekend Dining: Consumers are concentrating their dining out on weekends, impacting weekday traffic.

• Focus on Core Menu Items in Casual Dining: In more affordable settings, consumers are sticking to familiar and less expensive options.

• Importance of Loyalty Programs and Digital Engagement: Restaurants are leveraging digital tools to offer value and connect with price-conscious customers.

Market and Cultural Signals Supporting the Trend:

• Reports of Consumer Spending Pullback: General economic data indicates a cautious approach to discretionary spending among consumers.

• Strong Weekend Performance for Some Restaurants: Despite overall concerns, weekend dining remains a key driver for many establishments.

• Growth of Value-Oriented Promotions: Restaurants are increasingly offering deals and discounts to attract budget-conscious diners.

• Rise of Digital Ordering and Loyalty Program Usage: Consumers are readily adopting digital platforms for convenience and savings.

• Store Closures and Bankruptcies in Certain Restaurant Segments: This highlights the challenges faced by restaurants unable to adapt to changing consumer behaviors.

How the Trend Is Changing Consumer Behavior:

• More Intentional Dining Decisions: Consumers are likely being more thoughtful about when and where they choose to dine out.

• Seeking Value and Justification for Spending: There's a greater emphasis on ensuring a good return on their investment when dining at a restaurant.

• Potential for Reduced Frequency of Dining Out: Economic pressures might lead some consumers to eat out less often.

• Increased Reliance on Promotions and Loyalty Programs: Consumers may actively seek out deals and rewards to make dining out more affordable.

• Greater Scrutiny of Menu Prices and Overall Value: Consumers are likely paying closer attention to the cost of their meals.

Implications Across the Ecosystem:

• For Brands and CPGs: Need to offer products that can cater to both premium and value-oriented restaurant menus. Consider smaller portion sizes or more cost-effective ingredients for value options.

• For Retailers: May see increased demand for groceries as consumers opt to eat at home more frequently for regular meals. Opportunity to offer meal kits or prepared ingredients that mimic restaurant favorites.

• For Consumers: Need to make more conscious choices about their dining spending. Potential to find good deals but also might see some restaurants reduce quality to maintain lower prices.

Strategic Forecast:

• The trend of divergent spending in full-service restaurants is expected to continue through 2025, influenced by ongoing economic uncertainty.

• Restaurants that can effectively cater to both value-seeking and experience-driven consumers will be best positioned for success.

• Digital engagement and loyalty programs will become even more critical for attracting and retaining customers.

• There may be further consolidation or closures within the full-service sector as businesses adapt to the changing market.

• Innovation in menu offerings and pricing strategies will be key to navigating this complex landscape.

Final Thought (summary):

The current state of the full-service restaurant industry is marked by a clear division in consumer spending habits, where a desire for premium experiences during special occasions contrasts with a strong focus on value for everyday dining, requiring restaurants to strategically balance their offerings and engagement strategies to effectively serve these diverse needs in an uncertain economic climate.

Source: https://www.restaurantdive.com/news/full-service-restaurant-trends-nra-show-2025/749070/