WASHINGTON DC. WA, September 21, 2026 — Across the U.S., traffic at restaurants has fallen for two consecutive years, as menu prices increase significantly more than paychecks. Roughly 40% of consumers said they have reduced the frequency with which they eat out, and over 60% of operators in the restaurant space reported a drop off in foot traffic since early 2025. This transition is changing how many restaurants live, and how many die.
Consumers Are Becoming More Selective
Card data from Bank of America show that average monthly household spending on restaurants and bars rose to $371 in 2025, a 30% increase over pre-COVID-19 averages from 2019. Much of that increase is due to price increases rather than more visits, since total dollars spent dining out has actually started to decrease. Economist Chad Moutray with the National Restaurant Association said operators are facing higher costs to customers at a time when that consumer is “very stressed.”
Diners reconsidering where their money goes have driven chains such as casual-dining and pizza to 3 straight years of share loss. Taylor Bowley, an economist from Bank of America, said that consumers “are still going out to eat but they have just become much more picky.” Such selectivity has opened a growing chasm between restaurants perceived to be good value and those who fall somewhere in between.
A Market Splitting in Two
Industry analysts note spending is becoming more split between cheaper, value-based purchases and luxury items that people feel justified in paying for. Neither section is losing diners as quickly as midtier restaurants that fall into neither category. According to Consumer Edge Research execs, brands that are winning right now focus on bundles, portions guests can trust, and communicate value to keep the guest coming back.
In 2025, close to 42% of restaurant operators said their businesses were unprofitable despite upping menu prices over and over again. Chains have reacted by reducing portions or simplifying menus to limit costs while not eliminating margin completely. Some are relying on loyalty programs and AI-enabled personalization to retain price-sensitive customers.
The Rise Driven by Younger Lower-Income Consumers
Of particular note, restaurant spending has begun to recover in 2026, rising 3.3% year on year through July. That rebound is being led by younger consumers and lower-income households, with Gen Z experiencing the most accelerated growth among generational groups. A portion of that change seems to be taking place not out of new discretionary income but directly out of grocery budgets, tracking consumer patterns mapped by the U.S. Bureau of Labor Statistics.
Compared to big national chains, that growth is benefiting independent and regional restaurants disproportionately. Now, even with chains pouring marketing dollars into awareness-generating advertising and value promotions, diners are opting for local joints over recognizable brands. That preference is putting pressure on corporate chains to re-evaluate pricing strategies that were once based merely on scale.
What It Means Going Forward
A nationwide survey of restaurant leaders found that about 68% of consumers say they intend to continue reducing food service spending this year with an eye on affordability. But more broadly, overall spending on entertainment hasn’t cratered; it’s just being reallocated toward experiences people think are worth spending much money on. That pattern indicates a permanent change in priorities that have shifted away from the last economic cycle to follow along with whatever is trendy today.
Restaurants that offer a more buoyant value proposition—whether through pricing or experience—should be the ones who fare best right now. Those stuck in the middle, selling neither cheap food nor a unique experience, face the toughest challenge of them all ahead. The fate of the industry’s recovery—and which segments emerge bullish—will likely be led by operators’ adaptation through another year.
That trend broadens far beyond restaurants, across broader spending on entertainment, from movie tickets to live events. Industry researchers, meanwhile, found that surveyed consumers had shifted spending in groceries and entertainment alike as costs rose through the year. That trend indicates households are making conscious choices to sacrifice some things instead of just slashing discretionary spending everywhere, as documented by the U.S. Census Bureau.
In response, some venues have introduced tiered pricing, early-bird discounts, and bundled experiences targeting price-conscious Millennial customers. With operators going after a younger and more selective clientele, happy hour promotions and value-driven menus have made a comeback. Whether these strategies can sustain profitability over an extended period is the central question behind an industry still adjusting to a new consumer, according to economic insights from the Federal Reserve.
