A World of Good Wishes to You for the Holidays
One of the real joys of this Holiday Season is the opportunity to say
thank you and wish you the very best for the New Year.
Restaurant Outlook for 2026
Leaders take share, and searching for a spark. BTIG analyst Peter Saleh can think of only two instances over the past 20 years when restaurant industry sentiment was this poor headed into a New Year: COVID-19, and the 2008-ignited financial crisis. But this is a historically fickle sector in terms of mood swings, for better or worse. “While we end the year on a concerned note with depressed valuations,” he wrote in a note, “we believe change is the only constant, and think sentiment could turn on a dime with one or two months of improving sales trends.” So, will that happen as 2026 arrives? It’s difficult to project. Saleh believes restaurants are set for a “humbling year,” with most stocks and the majority of BTIG’s coverage zone down for the year. The foodservice space proved a significant underperformer in 2025 as sales trends became more challenging, discounting proliferated, and investment confidence cratered, Saleh said. The broad S&P 1500 Restaurants composite declined 4.4 percent year-to-date through December 9, with more pronounced drops among mid- and small-cap chains with those respective numbers down 17.2 and 17.1 percent. Notable weighted brands in 2025 included Chipotle (44 percent fall), sweetgreen (–78.5 percent), Shake Shack, and Wendy’s. This, in particular, paints a broader, challenged picture for fast casual as it weathers lagging sales and affordability gaps. Meanwhile, positive gains were elusive. Eighteen restaurant stocks were up year-to-date and only eight rose north of 10 percent, leaving a small group of winners, Saleh said, in Dutch Bros, Dine Brands, and Potbelly—the latter of which buoyed off a $566 million sale to RaceTrac. Yet, as noted, stock prices can be a delicate barometer. A remarkable reality about 2025, Saleh said, was industry comparable sales remained positive, even after recent slowdowns, and are on track to post a better year (positive 1.2 percent) than 2024 (0.3 percent decline). What’s soured some investor views, though, is the ongoing pullback among lower-, and now, middle-income consumers. Pressured spending combined with a restart of federal student loan repayments, proliferation of GLP-1 weight-loss drugs, and steep discounts hoping to lure back guests has resulted in a testy traffic landscape. In Saleh’s view, much of the sales deterioration owes to weary guests as diners grapple with higher childcare, rent, grocery, and energy prices. None of those appear poised to level off in 2026…
Lawmakers Propose Tax Breaks to Save New Jersey Diners
The legislation would exempt diners from sales tax and allow them $25,000 in tax credits. Two New Jersey lawmakers have proposed a bill that would extend new tax breaks to New Jersey diners in a bid to counter post-pandemic slowdowns and inflation. The bill, dubbed the “Saving Our Diners and Protecting Our Past Act,” would exempt qualifying diners from New Jersey’s sales tax and create new tax credits for the state’s historic diners and other restaurants. It is sponsored by Sen. Paul Moriarty (D-Gloucester) and Assemblyman Lou Greenwald (D-Camden). “They’re kind of the history and culture of many of our communities and kind of a symbol of our state, and I thought we could do something to maybe help them, preserve them, and keep them from closing,” Moriarty said. The sponsors said diners — something of a cultural hallmark in New Jersey — need the assistance amid rising costs and shifting consumer patterns that have pushed some establishments that have operated for decades to close. Those closures include, among several others, the 58-year-old Cherry Hill Diner, the 38-year-old Townsquare Diner, and the 85-year-old Miss America Diner. “This does two things: It preserves an institution that New Jersey is known for as part of our historical culture, and it also addresses an issue of affordability, not just for those small business owners, but for their patrons,” said Greenwald, the Assembly’s majority leader. Even diners that remain operational face challenges, the two men said. Some that used to operate 24/7 have slimmed their schedules or cut menu offerings, Moriarty said, and others dropped dinner service altogether to help make ends meet. “There’s one right down the street from where my office is that used to be open seven days a week and have long hours,” Moriarty said. “Now they’re open six days a week, and they’re only open until two in the afternoon.” The legislation would allow qualifying diners and restaurants that have been operating continuously for at least 25 years — not counting pandemic shutdown interruptions — to apply to be added to an annual registry of historic eateries…
Seven Game-Changing Trends in Restaurant Design
Designing Spaces That Could Do a Lot at Once. Do you remember that restaurants used to have a front door and possibly a drive-up? Those days are gone. Previously, 12 percent shifted to 80 percent practically overnight, and currently, guests demand to dine in, pick up mobile orders, drive through, grab deliveries, and place orders at the kiosks simultaneously, all under the same roof. The brands that are calculating this are realizing actual outcomes. Qdoba now has specific pickup lanes and experienced a 20 percent increase in sales. However, there is a twist to this: Starbucks realized that 30 percent of orders are made via mobile, whereas the remaining 70 percent of clients desire that coffeehouse feel. Indeed, they had converted some pickup shops into full cafes with registers and pastry cases since people were missing the experience. The shift has had a significant impact, stopping their sales declines. The key opportunity is to not compel customers to choose between convenience and experience. Space designs that are flexible to provide both. Creating Restaurants that People Will Remember. Our ThinkBlink assessment found that most restaurant brands are technically adequate but emotionally empty. They are crammed into what the industry pundits refer to as the mass middle, and slender fractions of a point separate them, yet they are all capable of it, and none of them is memorable. A memorable experience counts, as it is a key driver of growth, while things like service, offerings, and convenience become table stakes. The successful ones, such as In-N-Out and Chick-fil-A, have broken another code. They are emotionally connected leaders who do not necessarily innovate on a menu basis. How? They are interested in design features that generate engagement, rather than functionality. Pizza Hut brought the kitchens to the front and installed floor-to-ceiling glass walls so customers could see their pizzas being prepared. The Cava project Soul, which introduced natural light, plants, and red oak tables, and quantified actual rises in customer satisfaction and staff pride. Shake Shack plays regional music playlists, which they shake and replace harsh lights with warm, layered environments. This is supported by the statistics: 68 percent of diners revisit the restaurant when they have an emotional attachment to it. The emotion you bring about is your competitive advantage in a world of commoditized menus. In a Bid to Make Work Human, AI Is Used…
Trends and Challenges in the Restaurant Industry Today
What’s coming in 2026. Restaurant owners today are operating in very challenging environments. Post-COVID staffing shortages persist and many of the workers who left the industry have not returned. As a result, restaurants are relying more heavily on newer, less-experienced team members at the same time guests are paying more and expecting more. Inflation continues to push up labor, food and operating costs, tightening margins, and forcing operators to rethink profitability from the ground up. Guests have become more value-conscious, but they still expect emotionally engaging, personalized service with every visit. Looking ahead to 2026, we expect these pressures to intensify. Talent shortages will continue, guest expectations will rise and operators will need to focus on bringing guests in, but on maximizing the value of every guest already in the building. Technology will play a major role, especially tools that give managers clearer visibility into frontline performance, support training for inexperienced staff and create more consistency across shifts. The restaurants that succeed in the coming years will be those that operationalize consistency and build a culture of strong engagement and service-driven revenue. The sharp rise in labor, food and operating costs has changed how restaurants must think about profitability. The old model, simply driving higher guest counts, no longer works on its own. To remain profitable, operators must focus on maximizing revenue from the guests already in front on them. That means enhancing the guest experience through better engagement, more thoughtful recommendations, and greater consistency across team members. Profitability and guest experience are now inseparable. Restaurants can’t afford to leave money on the table through missed opportunities, an unrefilled drink, a forgotten recommendation, or a server who lacks confidence in describing high-margin items. These small lapses have an outsized impact on the bottom line. At the same time, guests are spending more on dining, so their expectations for service and personalization are higher than ever. As costs rise, frontline service becomes the most reliable, scalable way to influence both revenue and guest satisfaction. Better engagement leads to higher checks, higher tips, stronger loyalty, and a more stable, motivated workforce. While the industry has no shortage of technology for inventory management, reservations, or ordering, the biggest gap, and the biggest opportunity, lies in tools that can improve frontline performance…
As the Price of Beef Soars, Restaurants Are in ‘Code Red’ Mode
How to cover rising costs without scaring away customers. In early November, as Halls Chophouse was heading into the critical holiday season, its president, Tommy Hall, made a tough call: Prices at his steakhouse chain would go up. The price of the popular eight-ounce filet mignon rose to $61 from $57. A rib-eye, to $85 from $82. Beef prices had been climbing all year, and Halls found itself in a “code red,” said Mr. Hall, who heads up Halls Chophouse, which is family-owned and has five steakhouses in the Southeast. “We had to raise prices or we weren’t going to be able to cover costs,” he said. “Every time we do a price increase, I have butterflies in my stomach wondering how customers will take it.” For steakhouses like Halls, December is the biggest month of the year. It’s when companies rent out private back rooms for lavish parties; corporate expense accounts cover two-martini lunches; and families treat themselves to a night of steaks, bottles of cabernet sauvignon and sides of creamed spinach, truffle mac and cheese and au gratin potatoes. But this holiday season, many steakhouses — from fine-dining restaurants to midpriced chains like Texas Roadhouse and LongHorn Steakhouse — are walking a tightrope. They have to balance raising menu prices enough to cover at least some of their expenses, but not so much that consumers stop walking through their doors. With the nation’s cattle inventory at its lowest level since the 1950s, ground beef, chuck roasts and steaks have surged in price over the last two years. Restaurants that specialize in steak are feeling the same sticker shock as consumers in grocery stores, as the price of USDA choice boneless steak has soared 20 percent in the past year to an average of $14.13 a pound, according to September data from the Bureau of Labor Statistics. (The steak hit a record high of $14.32 in August)…
Restaurants Feel Short-Changed By the Elimination of the Penny
Penny-wise, pound-foolish. To the federal government, it makes sense to ditch the penny as it costs more to make than it’s worth. Restaurants are hoping Congress will help them buy time while the consumer adapts to the change. Penny for your thoughts? These days it’ll cost you a nickel. Last month, the U.S. Mint produced its final penny, the ultimate effect of a February request by President Trump to remove it from circulation. It set the stage for the gradual end of the coin’s 230-year run as a crucial part of domestic currency. To the government, doing so makes sense. It costs a mint to produce the penny—3.69 cents for each one, to be specific—so why make it? Yet such federal penny-pinching is leaving restaurants and other retailers feeling short-changed. A quarter of restaurant transactions are in cash right now, and pennies are already difficult to find. The Retail Industry Leaders Association said that more than 1,000 store locations of 25 major retailers do not have a penny to spare, literally. Some McDonald’s locations in certain pockets of the country are penniless. As such, restaurants must change the way they treat cash customers, rounding to the nearest 5 cents when they do not have the exact amount. This is expected to cost restaurants a pretty penny: The National Restaurant Association estimates that rounding will cost restaurants an estimated $13 million to $14 million per month, or up to $168 million per year. Restaurants are also concerned they could be left holding the bag when customers get angry that what they pay and what they’ve been charged are two separate things. “It can be a little frustrating if they are now learning that some restaurants round up, some round down, things like that,” Sean Kennedy, EVP of public affairs for the National Restaurant Association, said in an interview. “The last thing that a restaurant wants is to discourage or frustrate a customer for something that’s completely out of their control”…
Did You Know?
Catering to special dietary needs with RATIONAL. When Ameer Hassan and Riley Tatonetti started UNREFINED meal prep in Cleveland back in 2021, they were aware that they were trying something new. For one thing, meal prep services were still a rarity in northeast Ohio. For another, they were cooking for a very particular audience: people with special dietary needs. Tatonetti, the most experienced cook among the three, had first become interested in nutrition and food science as a teenager recovering from an eating disorder. “I realized that food is fuel,” she says. “And I really fell in love with finding recipes that were nourishing for my body. And then I really became passionate about wanting to help other people learn to cook for themselves and eat healthy”…
Employee Tip
7 things boomers do in restaurants that servers immediately judge them for. Complaining about the twenty-two dollar salmon that was clearly listed on the menu you ignored takes out your frustration on the one person who has zero control over pricing. Those experiences taught me a lot about human behavior, especially when people are hungry, tired, or just trying to enjoy a night out. And while every generation has its quirks when dining out, there are certain habits that tend to cluster around the baby boomer crowd. Now, before anyone gets defensive, this isn’t about age-bashing. It’s about awareness. Because here’s the thing: most servers aren’t actually judging you as a person. They’re just noticing patterns that make their already challenging jobs even harder. So if you’re a boomer who wants to be seen as a considerate diner (or if you’re just curious about what really goes on behind the scenes), let’s talk about the behaviors that make servers silently groan when you walk through the door…
