When Confidence Drops, So Does Dining Out: What Low Consumer Confidence Means for Restaurants

Let’s face it—when people start to feel uneasy about the economy, restaurants are often one of the first places they cut back. Whether it’s skipping the morning coffee run or trading dinner out for something homemade, low consumer confidence can seriously shake up the restaurant industry.

And that’s exactly what’s happening right now.

People Are Feeling Nervous—And It Shows

In April 2025, the Consumer Confidence Index dropped to 92.9. That might not sound dramatic, but anything under 100 signals that folks are feeling more pessimistic than optimistic. The last time we saw numbers like this was during the pandemic.

Why does this matter? Because when people get worried about inflation, job security, or just the overall economy, they tend to pull back on spending—especially on non-essentials like dining out.

🍟 Even the Big Guys Are Taking a Hit

You’d think fast-food giants like McDonald’s and Chipotle would be pretty recession-proof, right? Not so much this time around.

• McDonald’s just posted its biggest drop in U.S. sales since the COVID lockdowns—down 3.6% in Q1. A lot of that is from middle-income guests who are skipping their usual breakfast stop on the way to work.
• Starbucks and Chipotle are also seeing sales slow, especially with their more affluent customer base tightening their belts.
• Domino’s noticed that people are choosing to walk in and carry out rather than order delivery to avoid extra fees. That’s a clear sign people are getting more intentional about every dollar they spend.

Even brands that usually hold strong in tough times are adjusting their game plans.

🧠 People Are Changing the Way They Dine

With confidence down, we’re seeing some big shifts in how people are eating:

• They’re going out less often, especially to sit-down places.
• They’re looking for value—think $5 meal deals, coupons, and happy hours.
• They’re cooking at home more, even for meals like breakfast that used to be easy wins for quick-service spots.

All of this adds up to a big question for restaurant operators: how do you stay relevant when your customers are feeling cautious?

💡 How Restaurants Are Adapting

Smart operators aren’t just sitting back and waiting this out. They’re pivoting fast:

• McDonald’s is rolling out a $5 meal to win back price-conscious customers.
• Taco Bell and Chili’s are leaning into promotions to drive traffic.
• Menu innovation is picking up too—new items that feel exciting and affordable are helping get people back in the door.
• And loyalty programs and great service? They matter now more than ever.

It’s all about showing your guests that you get what they’re going through—and giving them a reason to still treat themselves now and then.

🚨 Bottom Line

Consumer confidence may be down, but that doesn’t mean restaurant sales have to be. The brands that listen, adapt, and find smart ways to offer value are the ones that will come out ahead.

Want to dive deeper? Check out this LinkedIn article for more insights into what’s working and what’s next.

Let’s keep the conversation going.
Are you seeing changes in your guests’ behavior? Have you tried any new tactics that are helping? Drop your thoughts in the comments or shoot us a message. Contact Mark here >>>

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What Do Tariffs Mean for Food Costs?

With the second Trump administration proposing tariffs on all imported goods, including food, it’s essential to understand the implications. A tariff is a tax on imports, increasing costs for businesses and consumers by raising prices and limiting quantities available in the U.S. Tariffs are trade barriers that raise prices and reduce available quantities of goods, in thiscase, food imported from other countries, for U.S. businesses and consumers.

From 2020 to 2021, U.S. food imports increased by nearly 4%, followed by an almost 6% rise from 2021 to 2022. In 2023, however, growth slowed to 1.95% (data in linked Excel sheet). Although imports have grown over the past four years, the pace has recently declined, showing some potential for stabilization or volatility ahead.

Potential Impact on Restaurant Costs

Restaurants that source ingredients from outside the U.S. could feel the effects of a proposed 20% tariff on imported goods. For example, consider a restaurant buying 100 pounds of coffee beans at $10 per pound. Without tariffs, the cost is $1,000; with a 20% tariff, the price would rise to $1,200. This simple example illustrates how tariffs could significantly raise expenses on high-demand imported ingredients.

Possible Responses to Rising Costs

One way restaurants may address rising costs is by adjusting their prices to reflect the higher cost of ingredients. However, price increases need to be strategic; blindly raising menu prices could deter customers and harm your bottom line.

Some operators may assume that ordering from a distributor shields their restaurant from tariff-related price hikes. While distributors may absorb some costs initially, they typically pass these expenses down the line. Consider this: when has a distributor absorbed increased costs without impacting your business?

To help manage these fluctuations, restaurant operators should explore the option of setting up long-term contracts with their distributors. These agreements can lock in pricing, providing a buffer against sudden cost increases and helping to stabilize expenses over time. However, it’s essential to negotiate carefully, as terms can vary widely. Taking a proactive approach now could protect your restaurant from unexpected financial strain if tariffs become more widespread.

Final Thoughts

Tariffs on imported goods, including food, could create a ripple effect throughout the industry. As restaurants grapple with increased ingredient costs, distributors, operators, and customers will all share the impact. While some restaurants may find alternative suppliers or make strategic menu price adjustments, flexibility and informed decision-making will be critical to managing these challenges. Staying adaptable and aware of market conditions can help restaurant owners maintain profitability and continue delivering value to their guests despite the changing landscape.

Mark can be contacted here.

The post Tariffs and Food Costs: A Guide for Restaurants to Stay Profitable in Changing Times appeared first on HotOperator.

According to The National Restaurant Association, the foodservice industry is on target to reach $1 Trillion dollars in sales this year. And when asked what stands out in the industry, here’s what they had to say (and what HotOperator recommends for taking advantage of those trends).

But before we get to that. Keep in mind, a strong message became clear: People want human contact when dinning out. You know, people helping people. So, take note before you try to tighten staff with computers.

The Key findings:   

1. Sales are up: The foodservice industry is forecast to reach $1 trillion in sales in 2024.

Is this sales in more people going out to eat? Nope. It’s mostly higher prices. To offset this, make sure you are mental anchoring your restaurant menu. Have comparative prices that show the guest just how little they are spending.

2. Restaurants are hiring: The industry workforce is projected to grow by 200,000 jobs, for total industry employment of 15.7M by the end of 2024. 45% of operators need more employees to meet customer demand.

Which is great. But it also offers another problem. Many operators are struggling to find workers (and keep them). A strong brand marketing campaign will help your restaurant stay top-of-mind. And that makes your restaurant more attractive to employees along with consumers.

3. Competition is strong: In 2024, 45% of operators expect competition to be more intense than last year.

This is difficult for most independent operators. Chain restaurants are taking a larger and larger portion of the market. To combat this, independent operators will need to use guerrilla marketing programs to stay in front of chains moving into their market. Try things like local bonuses. Special menu items that only local guests know about. And treat guests like royalty. 

4. Costs are up: 98% of operators say higher labor costs are an issue for their restaurant. 97% cite higher food costs. 38% say their restaurants were not profitable last year.

This points to a lack of marketing which puts stress on any restaurant. Simply put, a weak brand will not push their value up in the eyes of local guests. Our recommendation? Do a brand analysis along with a menu matrix to find out what your guests really think of your business. Every day you have a focus group going on in your restaurant. People are voting for your business with their pocket books and their feet. They are telling you if they like your business, and they are telling you what they like most about dinning with you (and what they don’t like)

But don’t do this on your own. You need an objective view. You need an expert to look at your business and offer advice. It might be painful, but it is necessary.

5. Consumers are value conscious: Nearly half of consumers are taking a wait-and-see stance when it comes to spending. Operators who offer a solid value proposition for dining out can nudge customers out of their holding pattern.

This is not a deep thinking thing to say. That’s because consumers are always value conscious. Where most people make a mistake is thinking that value conscious is all about price. But it’s not just about price. It’s about price and function together. A product can have a higher price only if you offer reasons that will support that higher price. Most operators get this wrong in their business and never think to support each item with the proper description and highlight.

6. Consumers love restaurants: 9 in 10 adults say they enjoy going to restaurants. Restaurants allow them to enjoy a favorite meal that has flavor and taste sensations they can’t easily replicate at home.

So it’s not all bad news. Of course people want to eat out. It’s fun. In fact, it’s a mini vacation. So, you need to nurture those feelings with your guests. That means you have to train your staff on how to work with guests so they make better choices when they order from you. And how to get your servers to leave their own struggles at the door when they come to work.

If you’re looking for help to build a better brand in your restaurant, give Mark a call. He’s an expert in restaurant branding, menu development, social media and content development. He’s been doing this stuff for nearly 4 decades, and has worked with more than 200 restaurants across the country. This gives him a unique ability to learn from other independent operators what’s working and what isn’t.

Hey, the first 15 minutes are free. To take advantage, call 800-316-3198 and leave a message. Mark will get back to you.

The post 6 Restaurant Trends and What They Mean (number 4 is essential) appeared first on HotOperator.

The Problem: How to reduce food and supply costs in restaurants.

A problem that most restaurant operators worry about most is: how to reduce food and supply costs in restaurants. This has been and always will be an issue for most restaurants because they are always purchasing products. And because of the volume of their purchases, it is very difficult to keep track of everything they are buying.

Here are 7 steps to reducing your food costs (and other supplies) from distributors.

1 – Trust – as in, trust your distributor sales representative.

But verify. In other words, don’t trust them blindly. Keep in mind, foodservice distributors make their money off of markups on products. The more they can charge you, the more money they make.

Also, they have a lot of people supporting their sales team. These people are looking at everything they sell and making sure they get the most money they can out of everything they sell.

A lot of restaurant operators think their sales representatives are working for them. They build close relationships with these people over time. But the sad truth is, those same sales representatives are paid based on sales commissions. And those commissions are based on the amount of money they can make off of their best customers.

As a restaurant operator, your best option is to trust, but verify. Have other sources you can turn to to check prices. It’s also wise to make friends with other restaurant operators and share prices with them. 

2 – Brands – don’t buy private label brands just to save money.

This will impact the quality of your foods overall, and your consistency. When thinking about how to reduce food and supply costs in restaurants, operators will be tempted to buy a private label product. This is because private label items are cheaper. And if you listen to a distributor sales representative, they will tell you it’s the exact same quality as the branded items.

This isn’t true, of course. Private label products change from time to time without notice. So, you never know what’s in the box or where it came from. My advice: stick with branded products as much as possible. It’s the only way to know you’re getting the consistent quality your guests have come to appreciate.

 3 – Menu Design services

Never sign a contract that includes your distributor doing your menu with a commitment to purchase attached. You might think you’re saving money, but you’re not. You might also think they are experts. But they are not. You might also think they have your best interests at heart. They don’t.

If you’re looking for answers to how to reduce food and supply costs in restaurants, getting a ‘free’ menu from a distributor is exactly the opposite thing you should do. Your distributor is not giving you anything for free. They are using the menu services to leverage higher profits and to lock you into buying a disproportionate amount of products from them.

It’s a way to get you to stop shopping on price. And most importantly, it’s their way of getting you to give up your purchase power.

4 – Social Media Services

Do it yourself, or better yet, hire someone you pay directly to do it for you. Do not rely on your distributor for that ‘service’. It’s not a service, it’s a way to lock you into higher prices. If you’re looking for the best answers to how to reduce food and supply costs in restaurants, again, getting services from a distributor is the last thing you want to do.

I can’t emphasize enough that foodservice distributors are not your partners. They are selling you products, and the best way for them to make a higher profit off of your restaurant is to lock you into support services. These services are all based on their getting a higher percentage of your business. And that comes at a much higher cost to you.

5 – Comparison Shop

Check your prices now and again. Distributors do not want you to do that. They hate it when you do that. But it’s the best way to make sure you’re not overpaying. 

If you’re looking to answer the question about how to reduce food and supply costs in restaurants? Shop around. It’s fine to make a contract with a distributor. But place your account into review from time to time. And when you do, know that the competitor is going to be looking for ‘lost leaders’. These are items they can lowball in order to get a higher return on other items they are selling you.

6 – Join Social Media Groups

Social media is a great place to join groups and talk about what people are paying for their products. Talk, compare, and get leverage.

Here are a couple of groups that you can join and ask for advice on purchasing power in your restaurant:

https://www.facebook.com/groups/RestaurantOwnersAndManagers/

https://www.facebook.com/groups/1626680234223669/

https://www.facebook.com/groups/restaurantpurchasepower

7 – Pay Attention To Inventory

Spend enough time looking at your inventory, and compare that to sales. Shrinkage and spoilage are two problems that can be solved with the right attention to detail. This is another great way to understand how to reduce food and supply costs in restaurants. Restaurant Owner is a great resource for getting advice and education on inventory control.

If you need help coming up with ideas on how to reduce food and supply costs in restaurants, build a better menu, or develop a restaurant marketing plan, give us a call! Mark Laux can be found here: http://www.hotoperator.com/contact-us/

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