Diners Are Trading Down or Trading Up

Consumers are bifurcating, trading down for clear value or up for clear quality, and brands that are neither get squeezed, according to Consumer Edge’s Restaurant 2026 Mid-Year Outlook.

“Look at casual dining: Chili's, Olive Garden, LongHorn, and Texas Roadhouse are winning on everyday value and generous portions, while the majority of casual dining chains we track are experiencing soft sales growth this year,” explained Michael Gunther, SVP, Research & Market Intelligence, Consumer Edge. “The key appears to be about articulating value and picking a lane.”

While some of the shifts highlighted in the report are cost-driven and could ease if gas and grocery pressure ease, more at-home eating, the move to smaller and healthier portions, GLP-1 adoption, and the snack-and-beverage occasion replacing full meals could be structural, Gunther noted. 

“The brands connecting combine disciplined pricing, compelling bundles, and a strong quality or portion story, so the value is obvious before you order. McDonald's and Burger King re-accelerated on value. In-N-Out and Culver's win on quality. Chipotle and CAVA rebuilt perceived value through innovation. The weaker performers are stuck in undifferentiated positioning, not cheap enough to compete, not distinctive enough to trade up.”

Report highlights include: 

• Coffee and snack chains such as Starbucks, Dunkin’, Dutch Bros and 7 Brew are driving the fastest growth, up nearly six percent year-to-date
• McDonald's and Burger King's value campaigns and meal deals have re-attracted price-sensitive diners, while Chipotle and Cava have won on menu innovation and quality at a fair price. 
• Hardee's, Golden Corral, Arby's, Waffle House and Little Caesar's, which skew heavily toward lower-income and car-dependent customers, face outsized risk as fuel costs rise and discretionary dining budgets shrink.
• Those aged 25–34 are showing the weakest spend growth across both full and limited service, while consumers 65 and older are proving the most resilient.

So far, pizza is 2026's biggest loser, the report found, as health-conscious diners move toward lighter options.

“Weakness in pizza is interesting because historically it might have been viewed as benefiting when consumers manage budgets more closely,” said Gunther. “Pizza is the classic budget feed-the-family option, so you'd expect it to gain when wallets tighten, but the pressure on pizza isn't necessarily about price, it's format and health: With roughly one in eight Americans on GLP-1 drugs and rising calorie awareness, diners are trading down to smaller pies or out to lighter options.

Defending frequency with low-ticket beverage and snack platforms could prove important this year, Gunther advised operators since it's the one occasion gaining share across every income level. 

“Lead with value perception, combos, reliable portions, visible quality, not just discounting. Know which locations and customer bases are most exposed to gas and cost-of-living pressure before it hits traffic.”

In the report's age cuts, the 65+ group is holding up in limited service on habit and value, and the 25-34 group is weakest and down across both service levels. 

“Older consumers reward consistency and value, while younger ones reward the occasion – the same message might not be successful with both.”