Operations
2026 restaurant outlook signaling challenges for fast casuals
December 1, 2025
Consumer spending on restaurants is holding steady, but fast casual operators must redouble efforts to deliver clear, consistent value to maintain momentum against resilient casual-dining and quick-service rivals, according to the 2026 Restaurant Outlook released Monday by Consumer Edge.
The report, based on transaction data, revealed that with "inflation fatigue" setting in, consumers are prioritizing affordability, quality and consistency. For fast casual brands, this trend presents a dual challenge: defending market share against value-focused competitors while battling a more selective consumer base.
"For restaurant brands, value in 2026 needs to go beyond discounts; they need to build consumer trust through fair pricing, consistent experiences and menus that deliver quality and satisfaction at every price point," Michael Gunther, vice president, head of insights, at Consumer Edge, said in a press release.
Casual dining, QSRs gaining ground
The core finding for the fast casual segment is a warning: Brands that master the balance of price and experience are gaining significant market share at the segment's expense.
- Casual-Dining Resilience: Brands like Chili's and Texas Roadhouse saw steady third-quarter 2025 growth, signaling that middle-income diners are opting for affordable, sit-down meals offering reliable service without a premium price tag. Red Lobster also rebounded with new value combos. For fast casual leaders, this means competing directly with casual dining's ability to offer a higher-touch experience at a similar or even lower cost per person.
- Chicken dominance: Menu simplicity and strong brand trust are fueling a multi-year boom in the chicken category. Raising Cane's has nearly doubled its market share since 2019-2020, now commanding 11% of the segment and showcasing the power of operational efficiency and a focused menu that delivers consistent value. This is a clear indicator of how well limited-service models are addressing the consumer desire for reliability and fair pricing.
Fast casual performance is mixed
CE's data shows that the fast casual category's growth is polarizing, rewarding brands that innovate while punishing those where higher prices are straining demand.
- Momentum loss: Chipotle and Panera experienced slower year-over-year growth in the third quarter of 2025, with CE attributing the slowdown to the impact of higher menu prices on consumer demand.
- Traction gained: Conversely, Panda Express and Raising Cane's gained traction, highlighting that menu innovation and digital engagement can offset pricing pressure if the overall offering is perceived as a good value.
The report underscores that consumers are scrutinizing every dollar spent on dining out, making them more likely to trade down for savings or trade up for a superior experience. Fast casual brands that are priced near casual dining but lack the value or atmosphere are particularly vulnerable.
How fast casual wins
The 2026 outlook suggests that fast casual brands must focus on several key areas to thrive:
- Reinforce clear value proposition: Brands must ensure their price point is justified by speed, convenience or perceived quality. Consumers are trading down to grocery stores across all income levels, meaning the dining-out experience must be worth the premium.
- Double down on consistency: The success of Raising Cane's demonstrates that simplicity and flawless execution build brand trust and drive market share. Operators should look to streamline menus and operations to ensure a reliable guest experience.
- Harness regional strength: The growth of regional favorites like Freebirds World Burrito and Biscuitville shows that local identity and comfort dining are driving momentum. National and regional chains can leverage community connection and menu authenticity to build stronger loyalty.
- Balance price and novelty: Brands that successfully introduce menu innovation while maintaining a clear value proposition, as Panda Express did, are better positioned for growth than those relying solely on price hikes.
"The brands seeing real momentum in this industry are those that treat value as part of their DNA, rather than a short-term promotion," Gunther said.
