Weak Foodservice Sales Weigh on Domestic Cheese Consumption

Domestic cheese demand, as measured in USDA’s monthly Supply & Utilization report, declined in June by 1.5% year-over-year (YoY), marking the third time in 2026 that this metric has been negative. Perhaps even more telling was that at 1.102 billion pounds, this figure was also smaller than June 2021, 2022 and 2024, and was the largest year-on-year decrease since December 2024. Need more evidence? Domestic disappearance tends to grow from May to June, averaging +1.4% over the past five years, but in 2026, this measure trailed off by 2.9% on a 30-day adjusted basis, a markedly counter-seasonal move. Americans are still eating cheese, but usage has slowed.

Looking at category-level data, natural American-style cheese utilization in the U.S. has fallen annually for the past four months through June. June’s tally of 449 million pounds was the smallest for the month since 2020.

The industry has been talking about the slowed demand for these varieties, making this result much less surprising. More surprising was the “other” cheese category, which experienced a 1.5% YoY decrease, the first drop since February 2025.

Weak foodservice sales are a key reason for the waning cheese consumption in the U.S. Restaurants are a major user of cheese, making it a critical part of the overall demand story. For American cheese, cheeseburgers are a huge user. Many burger chains, such as McDonald’s and Wendy’s, have reported weaker-than-expected same-store sales. Although these places offer value menus, loyalty programs and promotional products, it seems U.S. consumers have grown weary of these tactics. Further, for the core customers of quick-service restaurants, money is tight, as these families stretch their dollars to buy groceries and take on more debt.

Pizza sales are also weaker. Earlier this summer, Yum! Brands announced the divestiture of Pizza Hut, which had been struggling for years. Others in the space, though, like Papa John’s and Domino’s, reported less than stellar results in their most recent quarterly earnings reports. Domino’s North American Q2 2027 same-store sales grew just 0.1%, while Papa John’s dropped by 8.3%. Papa John’s also suspended its quarterly dividends and lowered its sales outlook for the year.

The pizza sector has been struggling for some time as diets and preferences change. Consumers are interested in innovation and higher-protein offerings. New products, such as pepperoni- or Parmesan-stuffed crusts, are also being added to menus at these places. With the advent of delivery apps, pizza chains are competing not only with each other, but also with other restaurants and food types, so they need to offer not only value but also innovative dishes. This is a shift for the industry.

Historically, when cheese consumption was low, burger joints would offer cheeseburger deals, but that seems unlikely in 2026. Soaring beef prices will keep purveyors from aggressively discounting, and prices on some menus have already been raised due to these cost increases. Pizza chains have also offered deals during periods of depressed demand, and that could happen again, but if preferences are changing, this may not be enough to drive sales higher.

Retail sales have also started to slip. For the four weeks ending June 14, Dairy Management Inc. data indicates that natural cheese sales slipped by 0.8% versus the prior year. Mozzarella sales dipped by 0.3% for that four-week period but remained above the prior year leading up to June 14. Cheddar volumes were down over both of those timeframes, highlighting the ongoing trend of weaker American-style cheese consumption. However, Parmesan, a higher-protein, lower-fat cheese variety, saw its volumes increase, underscoring the changing preferences and tastes.

While the story behind the decline in cheese sales at the grocery store is not entirely clear, Supplemental Nutrition Assistance Program (SNAP) benefits have changed because of the One Big Beautiful Bill, U.S. legislation passed in 2025, with some participants seeing their work requirements increase. While correlation does not necessarily equal causation, in the most recent USDA data (April 2026), the number of participants in SNAP had fallen by 12.6% from the year prior, about 5.3 million people. This has resulted in $1 billion less being spent from consumers with SNAP benefit funds. With cheese among the most-purchased items in the program, the reduction in benefits may be contributing to the decline in retail sales.

Cheese has certainly been on sale at grocery stores, so for those who can afford it, the drop in demand does not appear to be due to high prices. Consumer tastes are currently for all things protein. Cheesemakers have responded by adding front-of-label protein claims, but other items — such as ready-to-drink shakes, ultrafiltered milk and snack bars — pack a bigger protein punch and may be more appealing to consumers.

Domestic demand accounts for 90% of U.S. consumption, so it typically drives the bus when it comes to overall utilization. While June’s total cheese disappearance figure rose 0.9% versus the prior year to 1.245 billion pounds, its highest June ever, this was due to record exports. These international sales, pitted against weaker domestic demand, are critical to keep product from stacking up. If cheese exports are to continue at this brisk pace, U.S. prices will need to maintain their discount to other global competitors, which is motivating to international buyers. However, the situation is a Catch-22. Without exports, cheese prices will likely drop, but to keep exports moving while domestic demand is poor, cheese prices will likely be capped, meaning the current bearish market conditions will not change anytime soon.