Restauromics Weekly Update

New Bank of America Institute data shows independent restaurants and regional brands grew sales around 4 percent over the summer, while fast-food, casual-dining, and fast-casual chains combined grew 1 percent or less. Bars posted the strongest growth of any segment tracked. For an industry conditioned to believe scale always wins, that gap is worth sitting with.

The shift is being driven by an unexpected group: lower-income and younger diners, who are spending more at restaurants this summer but directing it away from national chains. Gen Z spending at restaurants jumped 7 percent year over year in July, nearly double the growth rate of millennials, the next fastest-growing generation, and Gen Z has now led every generational cohort for several months running.

This is not a story about chains struggling across the board. It is a story about where the marginal dollar goes when a guest has a real choice. Increasingly, that dollar is going somewhere that feels local, specific, or worth a special trip, not somewhere that feels interchangeable.

Read the Bank of America restaurant data →

Applebee's, Chili's, and Texas Roadhouse are having a moment, and the reason is almost embarrassingly simple. Years of price increases at quick-service chains closed the gap between a fast-food combo and a sit-down entree, and once that gap closed, cheap and fast stopped being the obvious value pick. Casual dining, with a server, real plates, and a bigger portion, started looking like the better deal.

Fast casual is caught in the squeeze. It built its entire pitch around sitting between QSR speed and casual-dining quality, and that middle ground is disappearing from both sides at once: QSR discounting from below, casual dining closing the price-to-experience gap from above. Sweetgreen posted same-store sales down 12.8 percent in the first quarter, with traffic down roughly 11 percent, a visible symptom of a category-wide problem.

The consumer perception gap tells the rest of the story. Sixty-eight percent of consumers believe restaurant prices are higher than they used to be, compared with 76 percent who feel that way about groceries, the widest gap between the two categories in more than a year. Restaurants have quietly become the relatively better deal, and most operators have not updated their marketing to say so.

See Q2 2026's restaurant winners and losers →

Canada's counter-tariffs on U.S.-origin imports take effect September 8, the day after this newsletter lands in your inbox. The rates run 15, 25, and 50 percent across roughly $27.6 billion worth of goods. The headline framing is cross-border retaliation, but the practical effect on restaurants runs in both directions, since so many imported ingredients pass through cross-border distribution before they ever reach a U.S. kitchen.

More than two-thirds of operators already say tariffs drove up their costs this year, and the categories hit hardest are the ones with the least domestic substitute: coffee, cocoa, seafood, and produce that is out of season domestically. These are exactly the ingredients smaller, specialty-driven menus tend to lean on for differentiation, which means the pain will not be evenly distributed across the industry.

Food costs overall are already running 34 percent above pre-pandemic levels, driven by a combination of tariffs, the lingering aftermath of avian flu, and tighter supply chains generally. Nearly half of operators surveyed say they plan to lean harder on local sourcing specifically to reduce exposure to trade volatility, not as a marketing choice but as a hedging strategy.

Read the 2026 mid-year cost report →

Sixty-nine percent of restaurants have adopted AI in some form, and 72 percent of operators say they plan to adopt more soon. That is not the interesting number. The interesting number is this: 76 percent of operators say technology gives them a competitive advantage, but only 28 percent say their tech investments have actually improved profitability. Most of the industry is spending on the belief that technology helps, without proof it is helping their bottom line specifically.

The most common AI use case right now is marketing content creation, used by 55 percent of operators, followed by predictive analytics and voice ordering. Voice AI in particular is moving fastest among small, independent operators rather than large chains, for a straightforward reason: annual restaurant turnover sits at 79.6 percent industry-wide, and 45 percent of operators say they simply do not have enough staff. A tool that answers the phone reliably solves a real, immediate labor gap, not a hypothetical one.

The gap between adoption and profitability usually comes down to specificity. Operators who bought a tool to solve one clearly defined problem, too many missed calls, too much waste from bad ordering, too many hours lost to manual scheduling, report real returns. Operators who bought a tool because it seemed like the direction the industry was heading report much weaker results.

Read the 2026 restaurant tech forecast →