The news: Restaurant demand is becoming uneven, with chains like Chili’s and Jersey Mike’s drawing customers while others, like Wingstop and Wendy’s, struggle to stem a decline in traffic.

The winners:

• Chili’s comparable sales rose 10% YoY for the Q12027 ended September 23, up 52% on a three-year stack and the 22nd-straight quarter of growth for the restaurant chain.
• Jersey Mike’s same-store sales increased 3% on the back of transaction growth; the company expects the metric to grow at least 2.5% this year.

The losers:

• Wingstop’s domestic same-store sales declined 5.4% YoY in Q3, causing the chicken chain to cut its full-year outlook. The company now expects same-store sales to fall as much as 7% this year, compared with its prior forecast of a 4% to 6% decline.
• Wendy’s is facing a $1.4 billion take-private bid from a group of investors led by Nelson Peltz’s hedge fund Trian Fund Management following six consecutive quarters of falling same-store sales.

The big picture: Restaurant chains are struggling to win over consumers who are reallocating spending in the wake of rising gas and grocery prices. The share of consumers eating out at a restaurant or ordering takeout at least weekly has fallen since 2022, according to Gallup. That trend is particularly pronounced among upper- and middle-income consumers: Just 48% of upper-income households report dining out at least once a week, down from 60% in 2022, the last time Gallup asked the question. Among middle-income households, the share has fallen 8 percentage points over the same period.

The pain is particularly acute for quick-service chains. Traffic has fallen for seven straight quarters, according to Placer.ai, reflecting the channel’s vulnerability to weaker spending among lower-income consumers. But not every chain is doing badly: Burger King’s recent hot streak reflects increased investments in product quality, consistency, and the customer experience that are attracting customers. Likewise, Chipotle’s same-store traffic is back in positive territory as it regains traction with younger and more affluent customers.

Implications for the restaurant industry: As gas and groceries eat up a larger share of consumer budgets, restaurant operators will have to make a more compelling argument to win diners. Meal deals alone are no longer enough to drive traffic. Instead, companies need to deliver a combination of quality food and service alongside craving-inducing menu items that can compel impulse visits and boost upsells.