"I Can't Afford to Fail Again, So I Cut Staff"... Restaurant Owners Turn to Survival Mode as Dining-Out Declines

Trapped in a "Stagnant Box Range"... Entering Survival Mode
Staff Reductions and Downsizing Emerge as Key Strategies
Overall Dining-Out Volume Shrinks... In-Store Dining Falters

The established growth formula of the domestic dining-out industry is collapsing. Until now, the industry has expanded by aggressively opening new locations, but with the sharp increase in labor costs, raw material prices, and rent, the sector has entered a phase where expanding sales alone can no longer offset the costs. As a result, the dining-out market is at a major turning point. This year, dining-out businesses have shifted from pursuing growth to focusing on restructuring and survival.

According to the '2025 Domestic and Global Dining-Out Trends' report by Korea Agro-Fisheries & Food Trade Corporation (aT) released on January 17, the most notable operational change among dining-out businesses is in staffing. Last year, 46.5% of respondents said they reduced their workforce compared to the previous year, while only 12.6% said they increased it. This means that one out of every two dining-out businesses is cutting staff and reorganizing their cost structures.

Half of Dining-Out Businesses in Survival Mode by Cutting Staff

These survey results indicate that the dining-out industry has shifted from a period of hiring freezes to a structure where hiring more staff actually increases losses. In the past, staffing was directly linked to service quality, and service quality translated into sales. However, now, increasing staff leads to a surge in fixed costs, and sales are no longer sufficient to offset these expenses.

It is not just about reducing staff. The proportion of businesses that reported reducing operating days was 18.2%, and those that reduced operating hours stood at 21.4%. In contrast, only 11.6% and 14.7% respectively said they increased these. As more consumers opt for simple lunches and dine at home for dinner, demand during the key dinner hours-a crucial time for the dining-out industry-has sharply declined. Consequently, maintaining longer operating hours now only increases labor costs without a corresponding increase in sales.

Interestingly, there is little evidence that dining-out consumption has shifted to delivery or takeout. The share of in-store, delivery, and takeout sales last year showed little difference compared to 2024. However, a higher proportion of respondents reported that all three-dine-in, delivery, and takeout sales-declined year-on-year. This suggests that it is not a shift to a particular channel, but rather an overall decrease in dining-out itself.

Dining-out businesses have responded not only by reducing staff and hours but also by increasing menu variety. The proportion of businesses that expanded their menu offerings was 38.3%, more than double the 16.2% that reduced them. Sales of home meal replacement (HMR) products also increased (29.8%) more than they decreased (23.6%). As in-store dining falters, businesses are restructuring dining-out as a product. Whereas a meal out used to be a single, complete purchase, now it is being divided into multiple products. Main dishes, sides, takeout, home meal replacements, and partially prepared items are all becoming separate revenue streams within a single store.

Consumer attitudes toward dining out have also changed. Dining out has become a tool for managing household expenses. Consumers are dining out less frequently, avoiding time slots and menu items that are more expensive, and choosing to dine out only when necessary.

A Structure Where Even Sales Bring No Profit... Costs Overwhelm Revenue

The domestic dining-out industry has recently fallen into a structural crisis. When asked about the main difficulties of running a dining-out business, the top three responses were rising raw material costs (25.7%), higher labor costs (18.0%), and inflation (14.7%). Declining sales (11.3%) ranked lower. This shows that the core of the crisis, as perceived by dining-out businesses, is not weak demand but cost pressure. Even if sales recover slightly, the burden of fixed costs-such as labor, rent, and raw materials-remains so high that there is little profit left.

This year, the dining-out market is expected to remain stagnant for an extended period rather than recover. The fact that more respondents reported a decline in sales last year (45.2%) than an increase (43.4%) clearly demonstrates that the market is stuck in a stagnant box-range rather than in a recovery phase. As a result, there is a high likelihood that dining-out businesses will enter a second phase of restructuring, further reducing staff and operational scale this year.