U.S. Consumer Spending Slows Sharply at Restaurants and Bars in May

Washington, D.C. — June 18, 2025

Consumer spending at U.S. restaurants and bars took a notable hit in May, according to the latest government data released Tuesday, marking one of the steepest declines in over a year.

The Commerce Department reported that food service and drinking place sales fell by 0.4%, part of a broader 0.9% drop in overall retail sales for the month. The figures point to growing consumer caution, especially in discretionary spending categories like dining out.

Economists suggest the decline could be tied to persistent inflation, rising interest rates, and a general sense of financial unease among middle- and lower-income households. While wages have seen modest growth, the cost of essentials — including groceries, housing, and energy — continues to strain consumer budgets.

“We’re beginning to see clear signs of pullback,” said Alicia Ramos, chief retail analyst at U.S. MarketWatch.
“Households are cutting back on non-essential spending. Restaurants are the first to feel it.”

The slowdown is raising concerns across the hospitality industry, which has struggled to maintain post-pandemic momentum. Several national chains have already issued profit warnings or adjusted their projections for Q3.

Despite the dip, some analysts remain cautiously optimistic, pointing out that summer travel and holiday weekends may offer a temporary boost to restaurant foot traffic. However, without a broader improvement in consumer confidence, the sector may face prolonged pressure in the second half of 2025.