More than two in five full-service casual restaurants in the District of Columbia say they are likely to close in the coming year, according to a new survey by the Restaurant Association of Metropolitan Washington (RAMW). The survey shows an industry struggling simultaneously with falling sales and customer traffic, escalating food costs, major federal layoffs in the DC area, and the ongoing impact of tipped wage increases. The situation is particularly severe for neighborhood full-service restaurants that have long defined DC’s dining culture.
The online survey of 217 Greater Washington restaurants was conducted between January 24 and February 11, 2025.
Key Findings
● Full-Service Casual Restaurants in Jeopardy: 44% of DC’s full-service casual restaurants say they are likely to close in 2025 (11% very likely, 33% somewhat likely) as rising costs and tipped wage increases outpace revenue – almost triple the number of fast casual establishments (15%) and nearly double that of suburban restaurants (23%).
● Customer Traffic and Sales Continue to Fall: Nearly half (49%) of all restaurants saw fewer diners in 2024 than the previous year (up 20%), while those experiencing lower sales jumped to 47% (up 52%). Diners are increasingly staying home due to rising prices, with 47% of DC residents saying they’re dining out less frequently.
● Job Cuts Deepen: Following a year of steady full-service restaurant job losses and tipped workers earning less (79%) and clocking fewer hours (56%), nearly 9 in 10 (85%) of DC full-service casual restaurants and almost two-thirds of other segments anticipate further cuts in 2025.
● Under Pressure from Inflation, Federal Actions: Restaurants face unprecedented challenges from multiple directions and express mounting concerns over widespread rising costs, including diners’ price fatigue (91%), credit card fees (77%), and continued elimination of the tip credit (72%). Adding to these pressures are increased tariffs (82%), federal workforce layoffs (73%), and immigration changes (68%) made in the new administration’s first 100 days.
● Forecast Points to More Downturn: More than half (51%) of restaurants expect conditions to worsen in 2025 – a 21% increase from the previous year’s survey. The District’s Chief Financial Officer estimates federal job cuts will lead to a $342 million decline in city revenues. RAMW models forecast that if the tipped wage increases another 20% in July, restaurant closures will spike 50% – exceeding 100 – and cut overall industry job growth by 2%.
“Our District’s full-service restaurants – the gathering places that define neighborhoods and create the cultural fabric of our city – are facing a historic combination of pressures,” said Shawn Townsend, President and CEO of RAMW. “The data illustrates multiple substantial burdens converging at once, threatening not just single businesses but potentially altering DC’s distinctive dining landscape. Without meaningful intervention, we risk losing the independent restaurants that make Washington a world-class dining destination.”
Profitability is declining across the local restaurant industry, with 62% reporting lower profits in 2024 – a 29% increase from 2023’s survey. This decline is especially strong in the District, where 67% of full-service casual and 69% of fast casual report decreasing profitability, compared to 52% of suburban restaurants. The financial strain comes from multiple directions – sales have fallen for 47% of all restaurant segments (a 52% increase from the previous year), while costs continued to rise. Food and beverage expenses increased for 68% of restaurants (averaging an 18% jump), with January wholesale food costs up 8% from last year. These mounting pressures are forcing difficult decisions, with 88% of restaurants expecting even higher expenses in 2025.
Tipped workers’ earnings are declining across the board, with 79% earning less in tips and 56% working fewer hours in 2024 than the previous year.
Tipped workers further expressed concern for the long-term viability of their jobs:
● 71% of tipped workers said they or someone they knew has had hours reduced.
● 54% said they or someone they know has been laid off.
● 78% have seen reduced customer traffic affect tips.
● 78% have experienced increasing customer resistance to higher prices, and 72% have seen higher menu prices negatively affecting tips.
“The data shows that while the hourly tipped wage is increasing, overall earnings are moving in the opposite direction,” Townsend said.
More than half (51%) of restaurants expect conditions to worsen in 2025 – 21% more than the previous year. The District’s restaurant market is increasingly volatile, with 155 new openings against 73 closures in 2024 – a 38% increase from 2023’s 53 closures and 52% above 2022’s 48. The accelerating churn signals a quickening pace of established businesses being replaced by newcomers. The District’s Chief Financial Officer projects that federal job cuts will cut city revenues by $342 million. In one early warning sign, 7,000 more unemployment claims have been filed in the first nine weeks of 2025 compared to the same period last year.
