Damon Wise opened his barbecue restaurant, Pineapple Express, in Montclair, N.J., with a traditional business plan. Forty percent of the revenue would come from food sales, and 60 percent would come from alcohol. A veteran of the New York City restaurant world who had operated restaurants in multiple states, he knew this was the magic ratio.
But over the past two years, that ratio started to break down. First, the food and alcohol split became 50-50; then revenue slid further, with 70 percent coming from food and only 30 percent from alcohol. In January, Mr. Wise announced Pineapple Express was closing.
“There’s a lot of factors that come into closing a restaurant, and that was really one of them. It kept coming up in all the meetings, ‘What can we do to get people to drink more?’” Mr. Wise said.
He’s sympathetic to people who need to avoid alcohol — he quit drinking five years ago. But his dying happy hour business and catering orders (which in the months before the closure had cash bars rather than customers paying up front for alcohol that guests may not drink) seemed to tell a more complex story. “I think with the economy, people are really holding on to their money,” Mr. Wise said.
A 2025 Gallup poll found that the U.S. drinking rate was at a new low, with only 54 percent of respondents reporting that they drank alcohol, and those who did say they imbibed reported drinking less. The reasons range from increased awareness of health risks from drinking,
But it’s a complicated prospect for restaurants, which traditionally make their highest profit margins on alcohol sales.
Preparing food requires perishable ingredients and a large amount of labor, while alcohol is shelf-stable and, except at the most dizzying heights of mixology, requires less work than cooking. As independent restaurants struggle with higher costs of all kinds — rent, labor, ingredients — the hollowing out of the most profitable part of the menu couldn’t come at a worse time.
According to David Henkes, a senior principal at the food service research firm Technomic, alcohol sales are slumping in every category of the restaurant industry, from fine dining to casual establishments, with 31 percent of operators reporting “severe declines” in alcohol sales in 2025.
“There’s not a quick, easy silver bullet fix that’s going to turn all of this around,” Mr. Henkes said.
At Amano, an award-winning Mexican restaurant in Caldwell, Idaho, Rebecca Alamilla has had to make some changes.
At Amano, in Caldwell, Idaho, Rebecca Alamilla had to add nonalcoholic options to entice diners.
Ms. Alamilla co-owns the restaurant with her husband, Salvador, who is the chef. About a year and a half ago, she noticed that many guests were declining the complimentary glass of sparkling wine the restaurant offered to anyone celebrating an anniversary. When they added a sparkling nonalcoholic wine as an option, guests stopped turning them down.
“We started realizing that people weren’t wanting not to drink, they weren’t wanting to drink with alcohol,” Ms. Alamilla said. The insight sparked a full menu rework around nonalcoholic options, which Ms. Alamilla said offset the loss of alcohol sales.
Other operators, however, say nonalcoholic drinks, while helpful and clearly in demand, can’t fill the financial gap. Marco Canora, the chef and owner of Hearth restaurant in New York City, said his 2025 alcohol sales were down about seven percent compared with the year before. His nonalcoholic cocktails require the same amount of labor, but consumers won’t pay the same price.
“Even really nice liquor is relatively cheap compared to juicing and good teas,” Mr. Canora said. “Consumers’ brains are like, ‘You’re going to charge me $18, and I’m not even getting alcohol?’ Yeah, because you have no clue what things cost, and you think alcohol should cost more than non-alcoholic drinks. It’s actually the opposite.”
In January 2025, U.S. Surgeon General Vivek Murphy published a report linking even light or moderate alcohol consumption to cancer risk. Health does seem to be on some consumers’ minds, but other operators say consumption patterns are quirky and unpredictable.
Dave Krick is a managing partner in a small restaurant group in Boise, Idaho, which includes the 30-year-old Bittercreek Alehouse. There, beer sales are down, but spirits sales are up, a long-term trend at the restaurant.
“I’m not convinced that people are as health-conscious as we think they are,” Mr. Krick said. He also notes that Bittercreek’s food sales are dominated by fried foods. “I’m shocked by how well those things sell.”
The dip in drinking might not point to a mass shift around health concerns so much as the more basic fact that as people age, drinking alcohol comes with more immediate downsides.
Marco Canora, the chef and owner of Hearth restaurant in New York City, said his 2025 alcohol sales were down about seven percent compared with the year before. Credit…Michael Falco for The New York Times
A 2026 report on adult beverage consumption from Technomic noted that people between the ages of 31 and 45 were the most likely to order alcohol at a restaurant. Millennials, the hard-drinking generation of shot-and-a-beer specials and craft cocktails, are beginning to age out of their peak drinking years. Many restaurant owners and managers who spoke for this story are millennials themselves, and said they are cutting back.
The unusual development is that Gen Z has yet to fill the gap. John Yelinek, the executive chef and wine director of Ladder 4 Wine Bar in Detroit, said, “The 21-, 25-, 28-year-olds of 10 to 15 years ago, those are the people who were drinking. That’s really not the case anymore.”
His restaurant is still selling wine at a normal clip, but he believes the reason is an emphasis on little-known wines framed as agricultural products rather than an excuse to get wasted. That appeals to sobering-up millennials and the more mindful Gen Zers alike.
Capri Club, a Los Angeles destination for Aperol spritzes and martinis, recently appeared on the Zillennial HBO comedy “I Love LA.” But Robert Flemming, the owner, calls his younger customers “one and done.” He said, “The Gen Zs get a picture, look cute, and go to the next spot or go home — who knows what they’re doing.”
Restaurant operators seem generally befuddled by what Gen Z is doing. It’s not drinking at their establishments. Is it smoking cannabis, legal for recreational use in 24 states, or experimenting with illegal but increasingly trendy psychedelics? Hanging out in their homes alone with their phones?
Ms. Alamilla of Amano noticed that many guests were declining the complimentary glass of sparkling wine the restaurant offered to anyone celebrating an anniversary.
Dustin Lancaster operates or is a partner in a dozen restaurants and bars in Los Angeles. He thinks that when trying to figure out Gen Z’s habits, many operators overlook cost. When Mr. Lancaster would go out after work in his early 20s, a whiskey and a beer were seven or eight bucks. Now, it could be pushing $20.
“It’s expensive for an adult — it’s really expensive when you’re 22.” (The Technomic report also notes that in September 2025, the unemployment rate for Gen Z was 9.2 percent.)
Add to all of this the advent of GLP-1 medications, which have been shown to reduce alcohol consumption and are now used by millions of Americans. While no restaurateur could point definitively to their use affecting alcohol sales, many suspect that they played a role.
A surprising bright spot on restaurants’ menus is the margarita, and agave spirits more generally. Justin Solomon, the director of operations at Ninfa’s, the famed Tex-Mex restaurant in Houston that popularized fajitas, said he noticed that while his other alcohol sales slipped in 2024 and 2025, his margarita sales grew. He’s shrinking his cocktail menus, but the margarita section will remain untouched. “Agave spirits are definitely in the forefront right now,” Mr. Solomon said.
Chilte, a stylish Mexican restaurant in Phoenix, Ariz., specializes in agave spirits like rare mezcals, as well as Mexican wines. Its alcohol sales have actually increased in 2025. Chris Benitez, the director of beverage and hospitality, said its bar and wine list feature products no one has ever encountered before in Phoenix, a gamble that turned out to be a major advantage.
“What appears to be a shift toward abstinence from drinking is a shift toward more thoughtfulness on drinking,” Mr. Benitez said.
He says that older customers will come in and “crush” margaritas. His youngest customers, however, will opt for a more expensive and unique bottle of wine, or a $40 to $50 pour of mezcal they’ll sip all night.
“I do find they’re also the ones sitting at the bar and extremely inquisitive and want to pick the bartender’s brain — what is this made of, who made it, how long has it been made — genuinely curious about what’s in front of them.”
