Dairy Queen in China has moved much quicker to respond to consumer tastes in the past three years. | Photo: Shutterstock.
The U.S. restaurant industry is at a pivotal moment in its history. And it doesn’t matter where in the world it’s operating.
Restaurant chains face a host of challenges to its business model, from population shifts to rising costs, aggressive new competitors and a consumer that is both under pressures of their own and rethinking their views on value and trying to cut weight.
Operators are responding by working as hard as they ever have. They’re innovating on the supply chain, moving quicker to respond to consumer trends and adding technology faster than they ever have.
“It is harder than ever to profitably run restaurants,” David Henkes, senior principal with Restaurant Business sister company Technomic, said at the conference.
Inflation remains a problem. Nearly a third of consumers in 50 different cities around the world are reducing spending because of inflation pressures. While global consumer prices are lower than they were in 2022 and 2023, when inflation ran higher than 15% at points, it still remains historically high at 4.6%, Henkes noted.
“Inflation is cumulative,” Henkes said. “Despite the fact that we talk about inflation cooling or slowing, it’s still growing. Prices are still going up.” And he noted that, in the U.S., there remains a huge gap between income and price growth.
It’s not as if restaurant prices are easing, either. Many restaurant companies are facing rising costs for items such as coffee and beef, the latter of which is on a multi-year inflationary cycle. That could keep prices rising.
It’s also tricky to see just how consumers view value. In the U.S., consumers are not responding to price point marketing the way they might have in the past. Fast-food chains have lost customers over the past two-plus years, despite their generally lower prices. But casual-dining chains, notably Chili’s, are thriving by marketing their overall value, rather than just price.
According to Accenture, nearly one-third of consumers now consider “value” to be “high quality,” which is up compared with last year. Consumers are also more likely to consider portion size and convenience as part of their value definition, rather than just price.
According to Technomic, 64% of consumers define value as “a fair price for the overall dining experience.”
That’s not the only way consumers are changing. Foodservice customers are increasingly likely to get their recommendations from social media. Thirty-one percent of consumers get their purchase recommendations that way, behind the physical store or friends and family.
But among those people who use AI, social media trumps all, used by 46% of consumers, compared with 33% who say they get their recommendations from friends or family.
“You want to be discovered in a certain way,” said Maria Rey-Marston, global beverages leader with Accenture Consumer Services. “You want to understand who’s searching for your locations, who’s searching for your experiences, because today, technology is mediating a lot of these recommendations, all powered by data and powered by technology.”
That puts pressure on brands to get things out quickly. Restaurant chains, eager to keep pace with the superfast world of social media, have sped the time for new menu items to get to market.
In China, for instance, Dairy Queen went from a 450-day pipeline to just 10 weeks, said Greg Kirian, VP of global marketing for the Minneapolis-based chain. “We have found that consumers have gotten more demanding and discerning over the last five years,” he said. “Using those information resources to identify insights and trends quickly is really a leap of the game for us.”
Much of the restaurant industry is right there with Dairy Queen China. In the U.S., restaurant chains are on track to introduce 40,000 limited-time offers, which would be the third straight record number of such introductions. Yet these past three years have been marked by declining traffic, particularly in the fast-food space.
Brands need to pay close attention to the social media channels that customers use, particularly younger Gen Z and Gen Alpha consumers. Troy Hooper, CEO of Hot Palette America, the U.S. parent of the fast-casual Asian chain Pepper Lunch, said he had to convince the operator of the chain’s Arizona State University franchise to have someone on staff who understands Snapchat.
“Snapchat replaced Facebook on universities and campuses,” Hooper said. “We might have an advantage to understand them and communicate better with them.”
Globally, U.S. chains appear to be doing okay, with most of the major restaurant chains growing sales faster internationally than they are domestically. But as Henkes pointed out, there are nevertheless indications of slowing sales.
Among the 150 largest global chains, according to Technomic, sales growth decelerated last year to 4%, from 10.1% the year before. But the percentage of chains with negative same-store sales has grown over the past two quarters, from 19% in the fourth quarter of last year, to 29% in the second quarter. “We’re seeing a little deceleration in the industry,” Henkes said.
While pricing has been a pressure point on the industry, there are other factors, too. More people worldwide are using GLP-1 drugs for weight loss. Use of those medications has been found to influence consumer behavior, more so at grocers than at restaurants. Yet their growing popularity has led to a believe that such medications are at least partly behind weak sales of late.
That might only get more challenging as the drugs themselves shift from injections to pill form, which could open them up to a lot more people. “It’s getting cheaper, it’s getting easier to take, and we’ve never seen anything like it,” said Henry McGovern, founding partner with the investment firm McWin Capital Partners.
U.S. chains are dealing with all this at a time when they also face more competition globally from aggressive new chains out of Asia. Five of the 10 restaurant chains that added the most locations in 2024 are based in China.
That includes the three fastest-growing chains: Mixue Ice Cream and Tea (7,700 new locations), Luckin Coffee (6,092 locations) and Cotti Coffee (4,100).
To be sure, there is considerable opportunity for restaurant companies globally. According to Accenture, by 2030, middle-class spending power is expected to have increased 40% compared with 2020. And 53 cents of every food dollar is expected to be spent on foodservice that year, up from 48 cents in 2020.
A lot of people will have little choice. In cities such as London, Tokyo and New York, 15% of homes are less than 500 square meters, Rey-Marston said.
“Which means that eating at home is not an option,” she said. “We’re seeing a new generation of homes that don’t have kitchens, either by choice or by space, which means the line between eating out and eating at home is going to be blurry.”
Technomic also expects a better year in 2026. Henkes noted that consumers generally expect to increase their visits to restaurants next year, including 22% who expect to visit full-service restaurants more often.
Technomic expects global restaurant sales to grow 1.8% in 2026 after accounting for inflation.
“There’s clearly demand in some markets—pent-up demand, but demand nonetheless,” Henkes said. “All of our research tells us that consumers love eating at restaurants. They love our industry. They love coming out and dining out.”
That is unlikely to change anytime soon, regardless of the economy.
