US foodservice and food retail: A rough start to 2025

As we move through 2025, volatility and uncertainty continue to define the economic landscape, particularly for the foodservice and food retail sectors, which had hoped for a rebound this year. Instead, both industries are grappling with the lingering effects of a cumulative 30% food inflation since 2020 and persistently low consumer sentiment.

In foodservice, restaurant traffic has now declined for eight consecutive quarters, with Q1 2025 seeing a 7% YOY drop. While average check sizes rose by 2%, this growth lags behind the food-away-from-home inflation rate of 3.8%. Consumers are increasingly gravitating toward value, opting for lower-priced menu items and promotions. As a result, total restaurant spending is down 5% YOY. However, not all segments are struggling: Healthier and international concepts, such as salad and Mediterranean chains, are showing resilience, while traditional categories like burgers and chicken continue to lose ground.

On the retail side, shoppers are prioritizing essentials and budget-friendly options. Big box retailers, heavily reliant on non-food sales, saw a 9.8% YOY decline, while traditional supermarkets experienced a 3.0% drop. Yet, there is a silver lining: Affluent consumers are still investing in premium food experiences, supporting growth in specialty and online grocery channels.

The road ahead remains uncertain, but these shifts highlight evolving consumer priorities and the need for agility across the food ecosystem.