Feast or Famine: The New Reality of Restaurant Success
The restaurant industry has seen expansive growth over the past several years since the end of COVID, with consumers spending an estimated $1.5 trillion at restaurants in the U.S. alone in 2025. Conversely, the story for the commercial real estate market is more bleak, with the industry struggling to recover to occupancy levels seen prior to the pandemic and with national commercial vacancy levels exceeding 20 percent in 2025. As a result, real estate prices have dropped dramatically, providing a unique opportunity for successful restaurant brands to purchase additional properties at a major discount as part of a strategic move to expand their footprint in key markets.
A few fast casual restaurant chains in particular are expected to be poised for growth, with Chipotle, Cava and Wingstop anticipated to see resurgence in 2026 due to both traffic increases and higher prices resulting from inflation, according to analyst predictions. Meanwhile, fast food brands like Yum! Brands, which owns Taco Bell and KFC, also expect to win additional market share through strategic branding, strong value propositions and additional technology adoption designed to improve the customer experience. Leveraging new offerings, innovative pricing strategies, personalization and bundled meal deals, Yum! is uniquely positioned for growth from both its market positioning and the potential sale of one or more of its brands.
The Future Isn’t Bright for Everyone
While these brands are viewing 2026 with optimism, others are facing headwinds. Many struggling brands have brought in new leadership to turn around declining sales and avoid store closures, but even amid change they face additional challenges in the form of inconsistent leadership and quality, which are compounded by a growing lack of relevance to their customer base. Others are facing the possibility of being acquired or closing stores to stay afloat. With additional factors like rising labor and food costs compounding these challenges, it is becoming increasingly difficult for many stores to keep their doors open, much less plan for growth.
With consumers having 700,000+ restaurants to choose from, the competition is fierce. This poses even greater threats for companies that are struggling to maintain or regain relevance, requiring them to place elevated focus on the balance of value and the customer experience to stay operational. All of this has created a mixed market in which the strong continue getting stronger and the weak are forced to close or consolidate.
Market Dynamics Paint a Bifurcated Picture
As successful brands look to expand their footprint, maintaining steady growth while identifying strategic real estate in high-traffic areas will be key in today’s competitive market. For those with strong execution, 2026 will offer unique opportunities to secure desirable locations at favorable prices, even if the purchased real estate isn’t utilized immediately. However, interest rates and financing constraints will also be important considerations when it comes to the real cost of expansion and staying abreast of trends in customer behavior as dining habits evolve can inform both location and customer experience strategies to ensure long-term success. While real estate can be core part of some companies’ growth strategies, providing customer value will still be key to success.
For companies that are struggling in today’s economic climate, the path forward may be less optimistic. Economic headwinds due to inflation and higher costs have led consumers to be more selective and value-driven when deciding where to dine. While many restaurant chains have achieved overall revenue growth, much of this growth has resulted from higher prices due to inflation rather than the number of customer visits. In addition, the cost of running a business continues to increase for financial operators, with food costs being 36 percent higher and labor costs being 35 percent higher since the pandemic. Restaurants hoping to balance these costs and drive more sales will require exceptional resilience, flexibility and agility to adapt to changing market conditions. However, many larger chains are also expected to consolidate aggressively as the industry becomes more expensive and competitive, becoming leaner to focus on growth in their stronger markets.
The Bottom Line
In an economic climate that is seeing commercial real estate prices fall while seemingly everything else gets more expensive, the outlook for restaurants in 2026 is certainly mixed. As strong, innovative chains are actively buying real estate and expanding their presence, the laggards are consolidating or being bought out. For those that are winning, solid execution and delivering unique value will be paramount for continued success. For those that are struggling, rarely is one factor the cause; it is typically the result of multiple shortfalls. Successful turnarounds will likely require a true focus on defining their target audience, a clear value proposition, simplified offerings, a strong focus on what they do well, exceptional customer experiences and a ground-up approach to streamlining operations before attempting to chase growth.
Did you know that NXTPoint Logistics specializes in custom FF&E (furniture, fixtures and equipment) logistics for restaurants, convenience stores, retail locations, hotels, events and more? If you’re looking to consolidate or expand your footprint, reach out to our experts to hear how we can streamline your FF&E logistics so your team can focus on growth.
