2026 Mid-Year Outlook, Part One

Modern Restaurant Management (MRM) magazine turned to industry experts for their insights on how the industry is performing so far in 2026 and expectations for the remainder of the year.

From a person who is very aware of what people eat for fun as well as their day-to-day consumption habits, I have observed that the most successful restaurants offer healthier options in an easy-to-understand format with great taste. Consumers are looking for the same comfort and ease that has been associated with dining out, but they would like to see better quality ingredients, a variety of meal combinations, and increased transparency in what they consume. The restaurants that succeed will be those that provide consumers with the option to choose a meal that offers both luxury and health benefits. These types of businesses will build long-term relationships with customers.

Throughout the remainder of this year, I would like to see foodservice operators emphasize consistency, value, and adaptability in their menus over chasing every viral item. A smaller number of high-quality items offered as build-your-own selections can be effective at reducing waste while giving consumers the ability to customize their meal. As people become more purposeful about how they spend money for meals out, each time a consumer selects an option to dine away from home, that option needs to provide a sense of satisfaction as if they paid too much.

— Rena Awada, Certified Nutrition Coach (PN1) and Founder of Healthy Fitness Meals
 

This second half of the year, restaurant owners are prioritizing protecting their margins without compromising guest experience. People are still dining out, and demand is resilient, with a projected $1.55 trillion in U.S. restaurant sales by the end of the year, even as consumers are more selective about their discretionary spending. Data from Kurv reinforces this insight, showing that dining out has become the top form of luxury spending for 64 percent of Americans. In states with the highest median income (MD, NJ, MA, CA, and CT), spending on high-end dinners costing over $100 saw a 14 percent increase from 2024 to 2025.

This second half of the year, restaurant owners are prioritizing protecting their margins without compromising guest experience.

That’s influencing operators to spend more time understanding their customers’ spending behaviors and their average ticket size rather than just driving more transactions. Still, payment preferences like contactless and online ordering continue to evolve and become expected at the point of sale. I see this as a great opportunity for restaurant operators to harness this inherently rich data to gain better visibility into purchasing patterns to help inform business choices.

Still, revenue growth doesn’t always guarantee profitability, and continuous labor and operating costs remain high. Operators invest in workforce development, and technologies will see improved productivity. The National Restaurant Association benchmarks median labor costs to account for nearly 37 percent of sales at full-service restaurants; this means that labor is a largely controllable variable. Because of this, restaurants are increasingly adopting integrated payment systems and digital ordering to reduce manual processes, which in turn improves their staff’s efficiency. I expect investment in connected payment platforms and operational tech to continue accelerating in the restaurant indus

— Nick Bencivenga, VP of Sales at payment processing platform Kurv 

From what we're seeing, sustainability is becoming a much bigger priority for restaurants, but it's shifting from being a marketing message to something that's built into everyday operations. Cost pressures haven't gone away, so operators are looking for practical ways to reduce waste, source ingredients more responsibly, and work with suppliers that can provide greater transparency. Diners are also asking more questions about where products come from, making responsible sourcing an important part of the overall dining experience.

For the rest of the year, I expect restaurants to continue investing in sustainable practices that also make business sense. That includes choosing ingredients that make better use of natural resources, reducing food waste, and partnering with suppliers that can clearly demonstrate their environmental commitments. Restaurants will start to treat sustainability as a long-term part of how they operate, rather than a seasonal campaign. When sustainability supports both the business and the guest experience, it creates lasting value for everyone involved.

— James Beveridge, VP Marketing at The Sustainable Agave Company 

What is the data telling us about the restaurant industry in 2026?

The restaurant industry isn't in crisis, but it isn't growing the way operators need it to, either. 

The restaurant industry isn't in crisis, but it isn't growing the way operators need it to, either. 

Guests are dining out less frequently and making more deliberate choices about where they spend. Inflation fatigue is real, and with more options competing for the same discretionary dollar, operators can't afford a single mediocre touchpoint. Every occasion has to earn its place in the guest's budget.

Nothing too revolutionary is happening right now. The industry has been flat for a while, and flat is not where anyone wants to be.

To remain profitable in a low-traffic environment, operators must deliver value, but it's more than discounting. Value is the measurable gap between what a guest expects and what they actually get. Product quality, service, convenience and atmosphere all factor into a guests’ perception of value; they need to feel the entire experience was worth the cost. 

QSR learned this the hard way post-COVID. A $12 drive-thru combo was a treat when it was the only option. But when restaurant dining rooms opened up, and guests had other options, price outweighed other factors. Customer satisfaction price complaints outpaced praise, a key metric in assessing customer satisfaction. Consumer sentiment data from our partners at Merchant Centric shows that after the industry's push toward value meals and price transparency in late 2024 and 2025, the price praise-to-complaints ratio improved by more than 40 basis points, climbing past 2-to-1. 

What Operators Should Be Focused on Right Now

The actionable takeaway: don't chase traffic through discounting alone, it erodes margin and trains guests to wait for deals. We recommend auditing the experience through the guest's lens, not just the P&L. By investing in the full occasion – product quality, service consistency, atmosphere and price – operators make every touchpoint worthwhile to the customer, maintaining loyalty and traffic. 

Where are opportunities? 

Flat traffic is a signal to innovate. Daypart expansion and new revenue occasions represent the highest-leverage opportunities for operators right now. 

In short, operators that invest in the full guest experience will be better positioned to earn repeat visits and long-term loyalty. 

— Richard Delvallée, Senior Vice President of Consulting Services for Revenue Management Solutions

Operators have been asked to absorb a lot this year. Food costs keep moving, labor is still unpredictable and consumers are thinking harder about every dollar they spend eating out. That means every menu item has to earn its place and be worth the cost associated with it. The restaurants doing well aren't just chasing the newest trend. They're finding ways to create something that feels new using the ingredients, equipment and processes they already have.

As we head into the second half of the year, I think menu versatility becomes even more important. Operators should be asking, "How do I get more out of what I already have?" If one ingredient or one piece of equipment can work across breakfast, lunch, dinner and dessert, that's a real advantage. Waffles are a good example. The same batter and iron that serve breakfast can become a sandwich at lunch or the base for a dessert at dinner. That's the kind of thinking that helps operators stay creative without adding cost or complexity.

— Michael DiBeneditto,  Golden Waffles CEO

The story of 2026 isn't that restaurants are struggling. It's that the gap between great operators and average operators has never been wider. It’s also the year AI needs to move from buzzword to demonstrated line-item savings.

From where I sit, watching hundreds of restaurant transactions cross our desks each year, this is the most divided restaurant market I've seen in my career. The cost pressures are real. Food, labor, insurance, occupancy costs, and credit card processing fees continue to squeeze margins, and roughly four in ten operators reported an unprofitable year in 2025. Yet transactions tell a different story. Well run restaurants with clean financials and documented cash flow are selling quickly and commanding strong valuations, while businesses with weak recordkeeping or inconsistent performance are struggling to attract buyers at the price sellers want.  

Biggest Surprise

Buyer demand has been one of the biggest surprises. While BizBuySell reported restaurant transactions declined 5.2 percent last year, We Sell Restaurants increased transactions by 27.6 percent, and that momentum continued into 2026. From our perspective, that reflects sustained demand from first-time buyers, professionals pursuing business ownership, and experienced operators expanding through acquisition. Many are targeting second-generation restaurant spaces to reduce startup costs, investment, and time-to-opening. One trend worth watching is that buyer activity cooled during the second quarter as economic uncertainty affected consumer confidence. We view that as a pause, not a retreat. Serious buyers remain active, but they are taking more time, asking tougher questions, and scrutinizing financial performance more closely than ever.

The other surprise is labor. After years of it being the number one complaint we heard from operators, the pressure is easing, and "no tax on tips" deserves some of the credit. We're hearing it from operators and workers alike: when tipped employees keep more of what they earn, restaurant jobs get easier to fill and easier to keep.

At the Forefront

We keep hearing about AI forecasting inventory to reduce waste, optimize labor schedules, and build marketing campaigns in minutes instead of days. But the jury is still out on whether any of it is creating real bottom-line value. This is the year AI needs to deliver actual dollars, not headlines. Operators should be asking one question of every AI tool they're pitched – show me the savings. That’s for both independent operators and franchisors dizzying themselves with new claims about what the next AI tool will do.

The story of 2026 isn't that restaurants are struggling. It's that the gap between great operators and average operators has never been wider.

Advice for the Rest of the Year

Know your numbers cold. The market has not become weaker. It has become more selective. Financial discipline is critical to protect margins today and build value for tomorrow. Every owner will eventually exit their business, whether by choice or circumstance. In today's market the difference between a premium valuation and a disappointing outcome is often the quality of the financial records. In addition, force those pushing AI tools to demonstrate real value.  If it can’t show up as dollars saved on the P&L, operators need to stop funding until it does.

Operators who combine operational discipline, strong unit economics, and the ability to adapt quickly to changing consumer expectations will continue to separate themselves from the competition through the balance of 2026.

— Robin Gagnon, Co-Founder and CEO of We Sell Restaurants

As a commercial kitchen cleaning equipment company, restaurants are one of our biggest customer segments, giving me unique insight into how the industry is doing, what its challenges are, and what its priorities are. A lot of operators we talk to are running on thin margins, despite seeing consistent demand. Food costs have been a concern, particularly whenever gas prices are high due to higher associated transportation costs. But back-of-house labor and energy costs aren’t always front of mind, despite posing strong opportunities for cutting costs.

I recommend restaurant operators review their back-of-house costs as closely as they watch their menus in the rest of 2026. Look for cost savings that will build over time, like reducing water usage, stewarding time, and cookware replacement. All of these come back to your cleaning and sanitation capabilities. There is cleaning equipment out there like heated soak tanks that can improve a commercial kitchen’s efficiency. The question then becomes about getting the capital to invest in new equipment, estimating how much it will reduce monthly costs, and determining when you’ll start seeing that return on investment and higher profitability.

— Kelly Gavson, Director of Finance of Hyginix
 

The conversations we're having with many restaurant operators have shifted about creating stronger lasting concepts. The strongest ones today aren't chasing trends, they're building brands with a clear point of view.

• Own a distinct identity. The restaurants standing out know exactly who they are and aren't trying to appeal to everyone.
• Let the narrative drive every decision. Brand, menu, service, design, music, and guest experience should all tell the same story.
• Create connection over trend. Guests remember concepts that feel authentic and intentional, not ones built around something they saw in another city.

— Jessica Gidari, Founder and Head of Creative & Development at Porcelain Collective

The restaurant industry is nearing a tipping point in its increased adoption of various technologies to improve operations – and transformation of traditional cooling approaches is leading the way.

Restaurant operators are grappling with massive energy costs that could potentially break a business.

Why? The reason is two-fold. Restaurant operators are grappling with massive energy costs that could potentially break a business, and with HVAC as one of the largest sources of energy consumption for restaurants, clinging to old cooling technologies is a true recipe for downfall. Additionally, in order to maintain customer loyalty, restaurant operators must make sure that guests are comfortable, and traditional HVAC technologies are completely ineffective in that realm (don’t forget a sweater – parts of that restaurant are very chilly). 

However, modern cooling technologies, especially those that utilize methods like thermal de-stratification, are dramatically slashing energy costs while also ensuring that temperatures are consistent and comfortable. It’s also important to note that these technologies also improve indoor air quality – a great way to keep guests healthy. 

All in all, restaurant operators need to wake up and realize their existing approach to cooling has been utilizing a 2D solution for a 3D problem, which is completely ineffective and only exacerbates issues. It’s time for operators to look at all the opportunities for energy efficiency in front of them and make better informed cooling decisions.

— Richard Halsall, CEO of Exhale Fans

In the first half of the year, consumers became more selective about where they spend their money, but this doesn't mean they are spending less. Instead, they are focusing more on experiences that feel worth the investment. This value goes beyond product quality; it includes personalization, convenience, hospitality, and moments worth sharing. In the beverage category, customization and limited-time collaborations have shifted from marketing tools to real drivers of customer engagement, visit frequency, and brand loyalty. Consumers are rewarding brands that offer consistent operations alongside fresh, relevant reasons to return. 

Consumers are rewarding brands that offer consistent operations alongside fresh, relevant reasons to return. 

Looking ahead, many of the industry's biggest changes are no longer emerging trends; they are becoming the new standard. Convenience will keep reshaping restaurant operations and will push for more investment in digital ordering, automation, and flexible restaurant formats. These improvements aim to boost efficiency without compromising the guest experience. At the same time, operators will face growing pressure to balance labor, profitability, and speed while maintaining a consistently high-quality guest experience for every visit. 

The biggest opportunity in the second half of the year won't come from chasing every new trend. It will come from identifying which consumer behaviors represent lasting changes and building around them. The brands that succeed will be those that blend operational excellence with thoughtful innovation, genuine partnerships, and unique experiences that foster long-term loyalty and provide guests with strong reasons to come back.

 — Geoff Henry, President of the Americas at Gong cha

In 2026, restaurant operators have had to contend with a range of macroeconomic and industry-specific challenges, but the real story of the year is the growing competition from grocery stores, warehouse clubs, and food-forward convenience stores. Placer.ai visitation data indicates that consumers are increasingly substituting grocery and other food-retail stops for restaurant visits as these channels step up their game with new products, prepared meals, and sharper promotional strategies. That shift has forced operators to weigh a wider competitive set and adjust their own product and promotional strategies accordingly.

— R.J. Hottovy, Head of Analytical Research at Placer.ai

The restaurant industry has shown significant resilience this year, especially in the fast casual space. Operators are navigating a more value-conscious market than in recent years. Costs and labor pressures remain part of day-to-day hurdles, making menu curation, customer listening, and operational efficiency more important than ever. In the fast-casual space, brands that clearly articulate both value and purpose are leading the pack. Consumers want convenience and speed, but they are also increasingly intentional about where they eat and spend. A significant industry conversation right now is how hospitality fits into the value equation.

More than ever, hospitality is what sets brands apart. It influences how guests experience the brand, adding value beyond the product and transforming a simple purchase into a memorable experience. In tandem, consumers are looking for dining options that truly serve their needs. Many consumers choose restaurants that not only fit into daily schedules but also proactively support their wellness-focused lifestyles – whether they need a healthy, protein-packed breakfast before work, a refreshing midday energy boost, or a late afternoon pick-me-up that propels them through their evening routine. 

A significant industry conversation right now is how hospitality fits into the value equation.

As a restaurant founder, what stands out to me is the continued momentum with wellness-forward dining and ingredient-driven menus. High-quality, nutrient-dense offerings, cleaner labels, and responsibly-sourced ingredients are no longer niche – they are expected. These principles have been integral to our menu approach since Toastique first opened in 2018, and I expect to see these values translate across additional restaurants that earn long-term customer loyalty. Food is no longer simply what fills us up, but an extension of our overall lifestyles.

As people continue to prioritize meals and dining options that support how they want to live their lives, I anticipate more restaurants will embrace the same commitment to ingredient quality, transparency, and thoughtful menu curation while still balancing indulgence with wellness in accessible and sustainable ways. Looking ahead, I think big wins will continue to emerge from fast-casual brands that can offer guests a well-rounded experience and dining options that support a healthier everyday lifestyle – restaurants where consumers can reliably grab something quick, nourishing and delicious, without overthinking it. That means fine-tuning operations, maintaining ingredient quality and transparency, and curating menus that feel intentional and elevated across morning, midday, and post-work/evening demographics.

— Toastique Founder Brianna Keefe
 

How is the industry doing?

This is really a two-part perspective. On one hand, we have the consumer and on the other, the restaurant operator. Consumers are still figuring out ways to go out and dine at very high levels. However, the restaurant owner is struggling to maintain profitability with the high cost of food, additional fees for fuel, and the climbing cost of labor.

What operators should be focusing on

Operators need to look at ways to improve the bottom line if they are going to be able to survive. They can’t cut costs by cutting quality, so they will have to look at labor, overall productivity and ways to incorporate technology.

What issues are at the forefront

Rising food prices remain front and center. In the last month alone, tomatoes have gone up five percent, bananas are up 6.6 percent and apples are up 10 percent over the past year. The prices of meat have skyrocketed as well.

Surprises

One surprise this past year has been the effect of tariffs on food in the US. Not only on the price of food but the effect tariffs have had on the price of to-go packaging, kitchen equipment and restaurant furniture.

What to expect for the rest of the year

Expect restaurant prices to continue to go up and customer spend to go down. Guests will begin sharing entire meals so that they can afford to go out. 

— Izzy Kharasch, President, Hospitality Works, Inc.

The conversations we're having with operators are noticeably changing. Instead of focusing on traffic above all else, they're thinking more about building stronger relationships with existing guests, scaling those efforts without creating more work for already stretched teams, and understanding exactly what their marketing dollars are driving.

One of the biggest opportunities for the rest of the year is turning anonymous guests into known guests.

One of the biggest opportunities for the rest of the year is turning anonymous guests into known guests. More operators will prioritize giving guests a clear reason to share their information on or before their first visit. We’re not far from an era where restaurants will have a 1:1 view of each customer’s behaviors and preferences and guests will feel that when they look at a digital menu or walk through the door.

— Jace Kovacevich, COO and Co-Founder of Dishio

Though operating costs are continuing to rise, restaurants have continued to thrive because consumer spending remains strong. However, we do see that consumers are spending differently, based on what represents value for them.

This is where wine by-the-glass can play an important – and often overlooked role – as restaurants determine where to focus revenue opportunities.

Consumers are drinking less overall, prioritizing quality over quantity. People also want to explore and discover something new, all of which is why they’re increasingly ordering by-the-glass when they dine out. They’re willing to pay more for a glass to learn than risk a full bottle on something they may not like.

By-the-glass pricing lowers the barrier to entry for premium wines and is how as an industry, we’ll recruit that next generation of fine wine lovers. Consumers are willing to pay more for dining experiences – so we need to make the restaurant offering a memorable event. This is an Instagram generation… bringing the bottle to the table makes a big difference. Nobody’s photographing your wine list. 

Inflationary pressures and rising costs mean restaurants need to increase revenue and improve profit margins while being sensitive to consumers’ price value assessments. Restaurants should focus on dollar margin, not percentage: You don’t take in percent – you take in dollars. If you sell a higher-priced glass, your dollar margin improves even at lower percentages.

Consumers are drinking less overall, prioritizing quality over quantity.

Restaurants simply adding three premium wines by-the-glass to their wine list can significantly boost their profitability and increase revenue. The numbers speak for themselves, an additional $5k profit on three cases of premium wine can bring in at least an incremental $60k a year for most restaurants.

Increasing premium wine sales by adding fine and rare wines by-the-glass is a simple way to increase margins while dramatically improving guest satisfaction, it’s a win-win. And reducing wine waste by 100 percent on all bottles poured by-the-glass using Coravin, well that’s just smart.

Another thing to look out for in the second half of 2026 is the rising opportunity for sparkling wine by the glass. We’re in a celebratory summer with America 250, and of course the holiday season is traditionally a great time for sparkling wine sales. Our research with restaurants shows that if someone starts with sparkling, they’re very likely to order another glass. Restaurants should consider upweighting their sparkling selection by-the-glass for the second half of 2026. If you offer it, customers will try it.

— Greg Lambrecht, inventor and founder of Coravin wine by-the-glass systems