The news: Restaurant sales are expected to rise 1.3% YoY on an inflation-adjusted basis, per the National Restaurant Association’s 2026 State of the Industry report.

Those gains come despite pressure on both consumers and operators.

Restaurant prices were up 4% YoY in January, per the US Labor Department, prompting diners to be more selective about when and where they eat out. More than 70% of consumers say they would dine out more often if they had more disposable income, according to the National Restaurant Association.

Operators face their own headwinds. More than 90% cite higher food, labor, insurance, energy, and card fees as major challenges, and 42% reported they were not profitable last year.

Still, the modest growth won’t be evenly distributed. While chains like Dutch Bros. and Raising Cane’s are aggressively expanding on rising sales, others, including Red Lobster and Pizza Hut, are closing locations.

Keys to success:

Dutch Bros.—which plans to open at least 181 locations this year as it works toward 2,029 shops by 2029, up from roughly 1,136 today—and Raising Cane’s, which has nearly doubled its store count since 2020 and is expanding into the UK and Mexico, offer clear lessons for thriving when consumers feel squeezed.

Know who you are. Dutch Bros. leans into indulgence, offering bold, customizable drinks that feel like small, affordable treats. Cane’s takes the opposite approach, with a tightly curated menu that supports speed and consistency.

Offer clear value. Despite its limited assortment, Cane’s delivers strong perceived value through straightforward combo meals that make pricing easy to understand and justify.​​

Find fresh ways to stand out. Cane’s has used prominent real estate, including its Times Square location, as a three-dimensional billboard to build brand awareness. It has also embraced viral marketing through a restaurant design collaboration with Post Malone and high-profile moments like a sponsored Instagram post from actress Sarah Snook following her Tony win.

Implications for restaurants: In a price-sensitive environment, consumers are still willing to dine out—but expectations are high. Among US adults, the biggest sources of disappointment are food quality (57%), portion sizes (55%), promotions (38%), and service quality (34%), per a recent McKinsey survey.

That gap between expectation and experience helps explain the current shakeout. Red Lobster, which closed around 130 restaurants during its 2024 bankruptcy, has yet to see sales return to prebankruptcy levels. Many of its aging, nautical-themed dining rooms need upgrades, and the chain would ideally operate fewer locations to focus on its strongest performers, people familiar with the company’s discussions told The Wall Street Journal.

Others, including Pizza Hut and Wendy’s, are closing underperforming stores as they lose share to competitors like Domino’s and McDonald’s, which offer a clearer value proposition.

In a year of modest industry growth, restaurants face a survival-of-the-fittest moment. Operators that deliver clear value, strong execution, and a distinct identity will gain share, while those that fail to meet rising consumer expectations risk being left behind.