Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Restaurant Industry
Transcript
- Lucas: You know, I was reading through some National Restaurant Association data from this past quarter — June 2026 — and one number jumped out: restaurant traffic from households with kids under 18 has dropped 22 percent since 2010. Luna: Twenty-two percent. That's a massive chunk of the customer base. So who's filling those seats? Lucas: Adults without kids. dual income no kids households — or DINKs, as they're called — now account for about 28 percent of restaurant spending, up from 19 percent in 2010. And the birth rate has been trending down for a decade, so this isn't a blip. Luna: So the industry is essentially being forced to redesign itself for a customer who eats out more often but wants a different experience. Lucas: Exactly. And you see it most starkly in the decline of classic family chains. Chuck E. Cheese, for instance — its parent company filed for bankruptcy in 2020, and even after restructuring, its store count is down about 15 percent from its peak. Meanwhile, fast-casual concepts like Sweetgreen and Cava are opening hundreds of new locations, targeting that adult crowd who want something quick but upscale. Luna: I remember when Cracker Barrel was the go-to for a road trip meal with the kids. But they've been adding bar areas and bourbon menus. Is that part of the same pivot? Lucas: They are. Cracker Barrel reported in their 2025 annual filing that same-store sales from their alcohol program — which they call 'The Barrel' — grew 18 percent year-over-year, while their core restaurant traffic was flat. They're essentially saying: we know families aren't coming as often, so let's get the childless couple to stay for a cocktail. Luna: And it's not just chains. I talked to a chef in Portland who opened a tasting-menu spot that's completely kid-free — no high chairs, no kids' menu, no booster seats. He told me his average check is $95 per person, and weekends are booked solid. Lucas: That's a perfect example. The industry is bifurcating: at one end, you have premium, adult-oriented dining that's thriving on higher spend per head; at the other, you have value-focused fast food that still draws families on a budget. But the middle — the sit-down family restaurant that's not cheap but not fancy — that's getting squeezed. Luna: And that's where chains like Chili's and Applebee's have been struggling for years. They're stuck in no-man's land. Lucas: Yeah. And the data backs it up: casual-dining traffic has fallen about 8 percent over the past five years, while fast-casual traffic is up 14 percent. The birth rate decline is accelerating that shift. Smaller households mean smaller parties, quicker meals, less tolerance for a long sit-down experience. Luna: But does this change what's actually on the menu? I mean, if you're cooking for two adults versus a family of four, the portions and price points must be different. Lucas: Absolutely. The rise of the 'shareable small plate' concept is a direct response to couples who want variety without committing to a full entree. And premium takeout — places like &pizza or Sweetgreen that offer a $14 single-serving bowl — that's designed for the DIN K household where both people work and don't want to cook. Luna: Speaking of which — if walking through the economy with us has made something click, a couple of dollars a month is genuinely what keeps these shows going. Buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, honestly, it makes a real difference. No pressure, but listener support is what keeps this ad-free. Luna: So back to those small plates — I read that the NPD Group now tracks 'adult-only dining occasions' as a separate category. That didn't exist ten years ago. Lucas: Right. And they estimate that category now represents about 42 percent of all restaurant visits. That's up from 31 percent in 2015. So restaurants are literally segmenting their business around child-free customers. Luna: Does that affect where they open locations? I'm thinking about urban areas versus suburbs. Lucas: It does. You're seeing more fast-casual and premium concepts cluster in dense urban neighborhoods with high concentrations of young professionals and empty-nesters. Meanwhile, suburban strip malls that used to anchor a family restaurant are struggling to fill those spaces. Some landlords are even converting those units into gyms or medical offices. Luna: So the landscape of American dining is literally being redrawn by demographics. And it's not just about birth rates — it's also about delayed marriage, more people living alone, all of which reduce the average party size. Lucas: Exactly. The average party size at casual-dining restaurants has shrunk from 3.2 people in 2010 to 2.6 in 2025, according to Technomic. That has huge implications for table turnover, server tips, kitchen prep — everything. Luna: And for the economics of the restaurant itself: if you're serving smaller parties, you need higher prices or more volume to cover fixed costs. That's probably why we've seen menu prices rise faster than inflation in this segment. Lucas: Right. The Bureau of Labor Statistics data shows that 'food away from home' prices have increased about 28 percent since 2020, while grocery prices are up 26 percent. So restaurants are passing along costs, but they're also trading up their customer base — exchanging a family of four that spends $60 for a couple that spends $50. Luna: And that couple is more likely to order a drink, an appetizer, maybe dessert. So the check average can be higher even with fewer people. Lucas: That's the key insight. The industry isn't just shrinking — it's repositioning. And the birth rate decline is the tailwind behind that repositioning. One concrete example: the number of restaurants per capita in the U.S. has actually risen slightly since 2010, from about one per 1,200 people to one per 1,150. But the mix has shifted dramatically toward fast-casual and away from full-service. Luna: So we're not eating out less; we're eating out differently. And the people who are having fewer kids are driving that change. Lucas: Yeah. And it's a global trend, too. In Japan, where birth rates have been low for decades, the restaurant industry has already gone through this. Chains like Skylark — which used to be a family restaurant — now position themselves as casual dining for adults, with smaller portions and more alcohol. Same dynamic, just a decade ahead. Luna: Is there any segment that's bucking the trend? Any restaurant type that's actually benefiting from more kids? Lucas: Maybe fast food breakfast. Because even in households with fewer kids, parents are still time-pressed in the morning. But even there, the growth is in coffee and sandwich combos, not the big family breakfast platters. Luna: So the to-go breakfast wrap is the demographic future. Who knew? Lucas: Ha. It's not glamorous, but it's where the numbers point. The bottom line: falling birth rates mean restaurants are no longer designed around the family of four. They're designed around the couple, the solo diner, or the small group of friends. And that changes everything from the menu to the real estate. Luna: I'm curious how this plays out over the next decade — especially as Gen Z, which is even smaller in size, becomes the core dining demographic. Lucas: That's a whole other episode. But for now, the takeaway is: if you're in the restaurant business, demographics matter more than decor.