The restaurant industry is grappling with big questions this year.
Diners these days are more value-conscious, more selective, and more willing to stay home; and costs, along with competition, continue to rise for operators.
As big chains and local independents try to protect sales or regain their footing, analysts who spoke to Business Insider said the year ahead will come down to whether restaurants can do more with less, without losing what made people want to dine out in the first place.
These are the biggest questions shaping the restaurant industry’s next chapter.
How can we increase our value proposition?
“Consumers are looking for value, but they’re also cutting back on frequency — restaurants across the spectrum have to improve quality and the dining experience while controlling costs to maintain all-important same-store sales metrics,” Asit Sharma, analyst for The Motley Fool, said. “That’s a difficult challenge against a backdrop of food and wage inflation.”
Operators are trying to understand their customers’ restaurant and dining behaviors better in order to determine what they value most, and adjust their strategy accordingly, Michael Della Penna, the chief strategy officer at the digital advertising research firm InMarket, said.
“Restaurants think their biggest competition is the restaurant down the street,” Della Penna said. “In reality, competition today is far broader and more fragmented. Consumers aren’t just choosing between restaurants anymore — they’re deciding whether to eat out at all.”
How do we build deeper connections with our consumers?
Many brands are using limited-time offers or collectible promotions to drive repeat visits, app downloads, and loyalty program sign-ups, in attempts to connect more deeply with their customers, Evert Gruyaert, the restaurants and food service leader at Deloitte US, told Business Insider.
Starbucks’ viral collectible Bearista cup and Chipotle’s protein snack cup launch are prime examples.
However, Gruyaert said, the question is bigger than a simple limited-time offer. Restaurant operators are trying to identify why their brand resonates with consumers, which means aligning with a broader mission.
“Something that remains always relevant is: how do we do the right thing around, for instance, sustainability? How do we source more of our ingredients locally?” he said. “Because that has a cost efficiency, but it also plays into some expectations from our consumers.”
How do we drive more efficiencies?
“Restaurants are very hesitant to increase menu prices much more than they feel is reasonable,” Moutray said. “However, they still have to make the math work, right?”
So, whether restaurants are adopting more technology — be it AI or other automation — or seeking alternative solutions to reduce costs, Moutray said efficiency is an “ongoing battle” for the industry.
Which tech solutions are here to stay?
AI has become a buzzword in the restaurant space, but it remains an integral part of the conversation, Moutray said.
“You’re seeing a lot of new technologies that are helping to speed up service, and make life a little bit more efficient, and hopefully improve the bottom line well,” Moutray said.
Voice AI integration is being continuously implemented at drive-thrus, and back-end systems are being overhauled for inventory and staffing purposes. New consumer-facing tech stacks are being rolled out, but it’s not yet clear what the gold standards across the industry will be.
“Five years from today, whether it’s a Michelin-starred restaurant with a single location, or a burgeoning brand capitalizing on the latest food trend, the average restaurant will be much more analytics-driven versus today,” Sharma said.
How do you keep growing the pipeline of talent?
“Labor, labor, labor,” is top of mind for restaurants because of the industry’s high turnover, Gruyaert said.
Expectations from talent are also changing, Gruyaert said. The minimum wage continues to increase, and workers are seeking more flexibility in their jobs, which creates more competition among restaurants.
“So, the question is: how do you keep funneling that pipeline of talent and keep people close to you as a brand?” Gruyaert said.
Who’s consolidating, going bankrupt, or filing an IPO?
Moutray said the industry will likely continue to see more consolidation this year as companies look to cut costs.
Sharma said smaller steakhouse chains with high fixed costs and operational inefficiencies are most at risk for closures and consolidations due to relentless beef inflation, coupled with their lack of purchasing power with suppliers, which he said “creates a profit real headwind, and these models will get sorely tested in 2026.”
It’s not all doom and gloom. Some brands, such as Jollibee, are looking to go public — and more may be on the horizon.
“You still have a lot of focus on closures, but the reality is that we still have a lot of folks who are opening, as well,” Moutray said.
To invest or not invest?
With high labor, food, and packaging costs, many restaurant brands are closely monitoring their bottom lines while investing in upgrades.
“Slimmer profit margins are translating into lower free cash flow, but whether it’s upgraded point of sales systems with rich data analytics for independent restaurants, or kitchen automation for chains, it’s clear that technology investments will be critical for improving restaurant-level and overhead margins in the coming years,” Sharma said.
Sharma said fast casual chains that can monitor inventory levels at restaurants in real time, and react quickly and efficiently through centralized ingredient kitchens, like Cava, have “a real edge in this cost environment.”
Similarly, quick-service restaurants with consistent, simple menus like Chick-fil-A, along with comfort food concepts that have low overhead and tech stacks purpose-built to accommodate digital orders, like Wingstop, are likely to see financial gains this year, Sharma said.
How do we drive growth in this environment?
Ultimately, the questions facing the industry boil down to one key issue: growth.
Each of the analysts who spoke to Business Insider said that’s the core issue facing restaurants this year, as consumer tastes change, food and labor prices increase, and technology continues to advance.
“The No. 1 thing it’s all about is how do you drive growth in this environment?” Gruyaert said. “That’s the big question.”
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