Casual Dining Value and Experience Will Create Recipe for Success in 2026

Despite ongoing inflation, workforce challenges and the looming effects of tariffs, consumer spending on restaurant fare has continued to edge upward. Projections indicate that food service industry sales will reach $1.5 trillion in 2025, which is encouraging news for operators. Yet, beneath this resilient demand are shifting tastes, strained household budgets and consumers becoming more selective about where they dine, how often and what they consider “worth it.”

The biggest shift is that casual dining is experiencing traffic growth, while quick-service restaurants (QSR) are seeing a decline. It’s a reversal from last year’s dynamic. With QSR prices rising and the gap between QSR and casual dining narrowing, consumers are willing to spend a little more for better quality and experience. QSR prices have reached a tipping point where casual dining is now viewed as offering better quality and value.

To compete in this environment, fast casual brands are leaning into quality cues, like ingredient sourcing, portion confidence and using limited-time offerings to create urgency. Meanwhile, QSRs are communicating value with affordable meal bundles and adjusted menu prices to attract price-conscious consumers.

While Costs Ease, Budgets Remain Strained

Wholesale food prices continued to trend higher in 2025, and while labor challenges have eased somewhat, operators could expect more states to enact minimum wage increases in the year ahead. That could keep menu prices under pressure.

According to a recent Bank of America Institute report, rising inflation expectations may signal a tightening of spending habits. As household budgets remain tight, value has become non-negotiable for consumers. Menu “engineering” is becoming more disciplined: brands are retiring low-margin items, simplifying prep to cut waste and labor time, and using premium sides, sauces and beverage upgrades to lift average check numbers without across-the-board price hikes. Companies that pair sharp price-positioning with a differentiated experience are best positioned to win repeat visits.

Easing Capital Costs May Unlock Opportunities

After three years of decline, restaurant M&A is poised to pick up. Many investors have been waiting on the sidelines for the dust to settle; however, forecasts now point to easing capital costs and a more merger-friendly regulatory environment.

Public markets may reopen, too. The first successful restaurant IPO could unlock a wave of offerings for brands with compelling unit economics, a scalable model and strong performance. At the same time, consolidation within banking, particularly acquisitions of regional lenders with deep restaurant relationships, introduces counterparty risk. If a new parent bank exits the sector, operators could find themselves scrambling. Operators are staying close to lenders, stress-testing cash flow under higher-for-longer scenarios and establishing relationships with larger institutions to preserve access to capital as bank appetites evolve.

Franchisees Are Diversifying

If legacy brands struggle to reignite traffic through innovation and pricing, the sector could see more franchisees pivot to newer growth concepts. Recently, several large operators diversified into brands such as 7 Brew, Dave’s Hot Chicken and Hawaiian Bros, attracted by strong unit economics and runway. The trend will likely accelerate in 2026 if incumbents don’t persuade operators and guests that they deliver real value.

Across the sector, experience is starting to carry as much weight as price. “Give me value or give me vibes,” is the latest decision filter among consumers. To thrive, operators must deliver a differentiated value proposition and show relentless adaptability. That means sharp menu engineering, with new items, limited time offers and targeted discounts that reinforce brand positioning, combined with an improved service culture and ambiance. Operators are considering investments in lighting, acoustics, seating layouts and greeting/order/payment routines, while improving accuracy and speed.

While the appetite for dining out remains healthy, selectivity is the new baseline. Success in 2026 will hinge on a disciplined playbook: make value visible through precise pricing, create menus that balance desirability and margin, invest in service culture and ambiance and maintain flexible access to capital as banking relationships shift. Resilience has carried the industry this far; adaptability will carry it further.