Mid-Tier Restaurants See Declines As Diners Favor Fast Food and High-End Experiences

Consumer Edge's Restaurant 2026 Mid-Year Outlook finds U.S. restaurant spending is becoming more fragmented as consumers shift their dining preferences. Diners are increasingly trading down to affordable, value-oriented fast food or trading up for higher-quality experiences, leaving mid-tier restaurants that do not fit clearly into either category with declining performance.

Coffee and snack chains such as Starbucks, Dunkin', Dutch Bros, and 7 Brew are driving the industry's fastest growth, with sales up nearly 6 percent year-to-date. This growth is attributed to consumers substituting full meals with coffee, refreshers, and snacks perceived as affordable treats. In contrast, pizza brands including Papa John's and Pizza Hut have experienced softer trends so far this year, as health-conscious diners move away from large, shareable orders toward lighter options.

The analysis highlights that value perception is a key driver of traffic. McDonald's and Burger King have re-attracted price-sensitive diners through aggressive value campaigns and meal deals, while Chipotle and Cava have gained ground with menu innovation and quality at a fair price. Brands that are not affordable enough to compete with quick-service restaurants, but also lack the quality to justify higher spending, are losing ground.

Rising gas prices are squeezing budget-conscious diners and the brands that serve them. Hardee's, Golden Corral, Arby's, Waffle House, and Little Caesar's, which have a customer base that skews toward lower-income and car-dependent individuals, are facing increased risk as fuel costs rise and discretionary dining budgets shrink.

Age is also shaping the dining divide. Consumers aged 25 to 34 are showing the weakest spend growth across both full- and limited-service restaurants, while those aged 65 and older are proving the most resilient, indicating that budget pressure is hitting younger diners hardest.

The report finds that changes in dining behavior appear to be structural rather than temporary. Beyond near-term budget pressures, increased cooking at home, demand for healthier options, and the rise of snack-based dining occasions are contributing to lasting shifts in how consumers spend their restaurant dollars.

Consumer Edge's full Restaurant 2026 Mid-Year Outlook can be found here.