Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Restaurant Industry
Transcript
- Lucas: Alright, episode 101 of the Demographics Podcast. We've spent the last several episodes tracking how falling birth rates ripple through specific industries — toys, beer, pet insurance, funeral homes, housing. Today we're looking at a place almost every American visits at least once a month: the restaurant industry. Luna: And this is an industry that, for decades, built its entire business model around families, kids, and big tables. So what happens when there are fewer families and fewer kids? Lucas: Exactly. Think about what the typical American restaurant looked like in the 1990s. Applebee's, Chili's, TGI Fridays, Olive Garden — these were designed for the suburban family unit. Big booths, kids' menus with crayons, coloring sheets, high chairs stacked in the corner. They were selling not just food, but an affordable family night out. Luna: A playbook that worked when the US total fertility rate was around 2.0 and families had two or three kids. Now we're down to about 1.6, and the number of households with children under 18 has dropped from about 50 percent in 1970 to something like 32 percent today. Lucas: Right. And the data from the big casual dining chains is brutal. According to industry tracker Technomic, full-service casual dining traffic in the US declined by roughly 30 percent between 2010 and 2025. Same-store sales at chains like Applebee's and Chili's have been in a slow bleed for over a decade. Luna: Part of that is competition from fast casual, sure. But the demographic shift is a huge underlying factor. If you're a family of four with two kids, Applebee's makes sense. If you're a couple or a single person, you're probably going somewhere else. Lucas: Let's put a number on that shift. In 2010, about 38 percent of all restaurant visits included a child. By 2025, that figure had fallen to roughly 26 percent, according to NPD Group. That's a 12-point drop in fifteen years. Restaurants that built their real estate footprint around family traffic are now competing for a smaller pool of customers. Luna: So what does that mean for the actual menu? I've seen some chains quietly shrinking their kids' sections. McDonald's Happy Meal sales have been declining for years. Lucas: They are. And the chain that has been most aggressive about pivoting away from the family model is actually Denny's. They've been testing a 'grand slam breakfast for one' focused marketing campaign, repositioning themselves as the late-night solo diner spot rather than the post-soccer-game family stop. Their average check per customer has actually increased, even as total traffic slipped. Luna: That's the key metric, right? It's not just about fewer butts in seats — it's about what those butts spend. A child's meal at a casual dining restaurant averages maybe six dollars. An adult entree with a drink is eighteen to twenty-five. So losing a kid and gaining an adult can actually be good for revenue. Lucas: But the restaurant has to be the kind of place adults want to go without kids. That's why we've seen the explosion of what industry analysts call 'fine casual' — brands like Cava, Sweetgreen, Dig Inn. These are fast casual in format, but with higher-quality ingredients, higher price points, and atmospheres that feel more like a wine bar than a cafeteria. Luna: Sweetgreen's average check is around fourteen dollars. Cava is around thirteen. That's comparable to a full-service chain like Chili's, but the experience is quicker, healthier, and — crucially — not kid-oriented. There are no high chairs, no toy promotions, no crayons. Lucas: And both brands have grown revenue at a compound annual growth rate of over twenty percent in the last five years, while the big family chains have been flat or declining. Sweetgreen now has over two hundred locations. Cava has over three hundred. These are not niche concepts anymore. Luna: But what about the fine dining end? I imagine fewer kids also means more date nights and more disposable income for couples. Lucas: Absolutely. The National Restaurant Association's 2026 report noted that the biggest growth segment in the industry is what they call 'polished casual' — independent restaurants with check averages between forty and seventy dollars per person. Sales in that segment grew by about eight percent last year, compared to just two percent for the overall industry. Luna: And those restaurants are almost entirely designed for adults. Smaller tables, communal seating, open kitchens, no separate kids' menu, often no high chairs at all. They are literally built around the assumption that diners are over the age of, say, twenty-five. Lucas: So the restaurant industry is essentially bifurcating. On one side, you have the premium experience aimed at couples and solo diners without children. On the other, you have the fast-food giants — McDonald's, Taco Bell — which still get plenty of family traffic, but are increasingly focused on value and convenience rather than the sit-down family meal. Luna: The middle — the full-service casual dining segment — is getting squeezed. And that squeeze is demographic at its core. Lucas: I think it's worth pausing here to talk about the broader economics of this. If fewer kids means more disposable income per adult — because you're not spending on childcare, education, healthcare for dependents — then restaurant spending should theoretically rise. And it has, on a per-capita basis. Luna: But the restaurant industry is also facing a severe labor shortage, which is partly a demographic story too. Fewer young people entering the workforce means higher wages for restaurant workers, which means higher menu prices. Lucas: Exactly. The National Restaurant Association reports that the industry had about 1.2 million fewer workers in 2025 than it did in 2019, even though overall population grew. The labor force participation rate for sixteen-to-twenty-four-year-olds — the traditional restaurant labor pool — has dropped from about 55 percent in 2000 to 45 percent today. Luna: So you've got fewer customers who are families, but the customers you do have are spending more. And you've got fewer workers, which pushes up costs. That combination is forcing restaurants to rethink everything — from the size of the dining room to the complexity of the menu. Lucas: Speaking of that — if walking through the economy with us has made something click, even just once, we'd love to have you as a supporter. It's what keeps this show ad-free and independent. If you're interested, you can find us at buy me a coffee dot com slash fexingo. No pressure at all, just a simple way to chip in if the show's added value for you. Luna: Yeah, and it genuinely makes a difference. Every bit helps us keep digging into these data points and bringing you the stories behind the numbers. So thank you to anyone who does. Lucas: Alright, back to menus. One really concrete example of how restaurants are adapting to this demographic shift: the rise of the 'mini meal' or 'small plate' concept. Traditionally, American restaurants served large entrees meant to be shared or taken home. But with more solo diners — because of fewer families, more single-person households — operators are shifting to smaller, more varied portions. Luna: Think about the success of chains like True Food Kitchen or Flower Child, where the menu is built around bowls, shareable plates, and smaller entrees. The average check is higher per person, but the portion size is smaller. It's the opposite of the 'supersize' era. Lucas: And this is directly connected to household size. In 1970, the average US household had about 3.1 people. Today it's 2.5. That means more meals eaten alone or in pairs. A family of four might order four entrees and share an appetizer. A solo diner will order two small plates and a drink. The economics are different. Luna: Another adaptation: the rise of the 'chef's counter' and bar seating. Many new restaurants are designed with almost no two-top or four-top tables. Instead, they have long communal tables and bar seating. That's not just a design trend — it's a response to the fact that a large portion of diners are eating alone or in pairs and prefer a less formal, more interactive setting. Lucas: And the data backs that up. A 2025 survey by OpenTable found that 34 percent of all restaurant diners in urban areas ate alone at least once a month, up from 22 percent in 2019. That's a huge shift in a decade. Restaurants that can't accommodate a solo diner — either psychologically or physically — are losing that customer. Luna: So what does the restaurant of 2040 look like, given these trends? Lucas: I think you see a continued hollowing out of the mid-market casual dining chains. Some will survive — ones that can pivot to a more adult-oriented, smaller-format model. But many will close or consolidate. The growth will be in two segments: premium fast-casual or polished casual, and value-focused quick-service. The middle is dying. Luna: And the family restaurant — the kind with a playground and a party room for birthday celebrations — becomes a more niche concept, perhaps concentrated in areas with higher fertility rates, like certain suburban or rural communities. Lucas: Exactly. We're already seeing that. The handful of casual dining chains that are still growing, like Texas Roadhouse, tend to be located in the South and Midwest, where birth rates are slightly higher. Meanwhile, chains in the Northeast and West Coast — where birth rates are lowest — are closing locations. Luna: So the geography of dining out is also going to shift. And that has implications for commercial real estate, for local tax bases, for employment patterns. Lucas: It's a pretty profound reshaping. The restaurant industry, like so many others, was built on the assumption that the population would continue to grow and that the family unit would remain the core economic unit. That assumption is breaking down. Luna: But what's interesting is that the industry isn't just passively reacting. We're seeing really creative adaptations — the solo diner counter, the mini meal, the premium fast-casual model. Restaurants are actually innovating their way through this demographic shift. Lucas: They have to. Because demography is destiny, as they say. And for the restaurant industry, the next twenty years are going to look very different from the last twenty. Thanks for listening to The Demographics Podcast. We'll be back with another episode soon.