Q&A: Resilience, customer experience and the new value proposition in the restaurant industry

With nearly 16 million jobs supported and historic sales figures expected to surpass $1.55 trillion, the restaurant industry remains a key driver of the US economy in 2026. However, the sector faces challenges, as 42% of operators report not being profitable. Chad Moutray, senior vice president of research and knowledge and chief economist for the National Restaurant Association, predicts the year will be one of recalibration in which operators will adapt to shifting consumer habits and financial pressures by embracing tax reforms and AI tools, signaling a transformation in how restaurants sustain profitability and relevance in a changing landscape.

Here, Moutray sits down with SmartBrief for a deeper dive into the findings from this year’s State of the Restaurant Industry report and what diners and operators can expect in the months ahead.

The 2026 State of the Restaurant Industry report projects total industry sales to reach $1.55 trillion. Looking back at the trajectory over the last few years, what do you see as the primary driver of this record-breaking spending? Is it a fundamental shift in how Americans view dining as an essential part of their lifestyle?

Well, I think a large part of that is that people still like going out to eat. There is this surprising resilience in the US economy and in restaurant dining that, despite all the challenges out there and the headwinds we’ve faced since the pandemic, you still see this kind of resilient sales pattern.

That doesn’t mean that everyone wins in that conversation. There clearly are some restaurants that are doing better than others, but you still have this sense that people find going out to eat as an essential part of their lifestyle. In the State of the Industry (report), we discovered that even if people are pulling back on spending and other categories, they’re still wanting to go out to eat.

Now, we also learned that they were going out less, maybe than they were, given all the financial challenges that consumers are facing, but they’re still going out to eat. And I find hope in that. It’s a nice sense of optimism, that we continue to kind of move to new heights.

Sales are expected to increase, yet the SOI report found that 42% of operators weren’t profitable in 2025. How should we reconcile record revenue with persistent margin stress? Has the economic structure of running a restaurant fundamentally changed since 2019?

The math is very difficult for restaurant operators right now. It’s a very challenging time to be a restaurant operator. They’re seeing tremendous cost increases across the board for labor, for food, for insurance, for property taxes, for health care. And at the same time, they’re seeing these higher costs, and they’re facing a consumer who is pushing back, saying, “I don’t want any more price increases.” And so there’s a hesitance, I think, amongst many restaurant operators, to pass on some of those additional costs, because they’re worried already about traffic and the impact that price increases could have on sales, so they’re eating a lot of those extra costs.

The median profit margin for a full-service restaurant is 2.8%. That’s down from 4% before the pandemic, and it is 4% for limited-service restaurants. I wouldn’t be surprised if you saw those profit margins narrow further. That’s really what leads to that figure of more than 40% of respondents saying that they were not profitable last year. That’s a significant challenge. We know from some of our previous operations abstract data, that number typically runs between 20% and 25% so that (42%) was a little higher than the norm. That really speaks to how difficult the math is right now for many restaurant operators.

The report forecasts the addition of 100,000 new jobs this year, bringing total industry employment to nearly 16 million. Can you speak to the industry’s role as one of the nation’s largest private-sector employers?

This challenge, this tight labor market, is one that I think we’re going to continue to grapple with moving forward. In the State of the Industry report, 22% of operators said that they were struggling to find talent. That’s the lowest we’ve seen since the pandemic. So you’re seeing it’s easier to hire, and yet for certain key positions, such as managers and chefs and really skilled people, I think you’re still seeing some challenges there.

You know, technology can certainly help, as it improves overall productivity in the restaurant. We know it has helped by freeing up the manager to build more time into managing their restaurant. We know, for the cooks and chefs, technology can free up more time for customer engagement. Working in the restaurant sector is a great career. It’s a good stepping stone to even bigger careers, potentially. And making that sell is really incumbent on restaurant operators as we move over the next few years, and as labor continues to stay pretty tight.

You mentioned technology and technological advancements in the industry. How is AI playing into that? How is it shifting from a back-of-house novelty to a front-of-house productivity multiplier?

From the customer-facing point of view, you see more ordering kiosks, you’re seeing being able to pay at the table with QR codes, and maybe you’re talking to AI through your drive-through when you’re placing your order. All of those things have really helped improve the overall customer experience, but they’ve also taken a little pressure off staff so they can focus on other parts of their job. It’s about making sure you are best utilizing the staff that you have, and improving the overall customer experience. And, for the most part, customers seem pretty embracing of those technologies.

At the same time, we know technology has really helped with managing staff, enabling recruitment, retention and scheduling, and that has freed up many managers and HR professionals to focus on other aspects of their jobs. In the kitchen itself, you’re seeing a lot of adoption of methods to increase the overall throughput of getting an order out as quickly as possible. And some of those tools, I think, are very helpful in improving the speed and the overall productivity of the kitchen.

The report indicated that 8 out of 10 operators believe tech gives them a competitive advantage, but 20% are still a little hesitant or unable to tap into certain technologies. What do you think this report indicates about the cost of getting behind on technological advancements?

Well, the larger companies, or restaurants, in this case, are always the first adopters. They have the scale, the ability and the resources to do that, but those eventually trickle through the system, and you’ll see much greater adoption later on, even in smaller businesses. It’s just that if you’re a small mom-and-pop restaurant, the reality is you’re so busy doing what you’re doing, you’re probably not focused as much on something like AI.

I also think the phrase ‘AI’ is scary to people, quite frankly, so I think it’s really incumbent on those who are selling some of those technological services to really kind of bring that to a level that makes it practical. Operators who make this investment in technology need to understand how it’s going to help them, how it’s going to help their bottom line, how it’s going to make them more productive, how their workers are going to feel about it.

I think that 20% is largely a conversation about, ‘I’m already busy, right? What does that mean for me? How is it going to help me? How’s it going to help my bottom line?’ Training time for all that factors in as well for operators. And there is a lot of scariness about AI. The media is talking about how it’s going to take away jobs, and I think those stories are overblown. I think largely AI, like every other technology, simply has made us more productive and has freed us up to do other things.

The report highlights that comfort, health and value are the pillars of 2026. How are successful restaurants reimagining the value proposition so that it includes things like quality, consistency and emotional connection?

We talk a lot about value, and now the buzzword of the moment is affordability. It’s important to realize that value is not just about price. That was actually a finding that came out of last year’s State of the Industry report. When I’m going out to eat, I want the overall experience. I want to be waited on. I want to have a great menu, maybe something I haven’t tried before, something that helps me celebrate those big occasions. That’s all part of that. I’m questioning if I’m getting a great experience for the dollar. I think that’s a large part of the value conversation.

For many people, it is about price. But even in that price conversation, you’re looking at and judging that overall experience. Operators are thinking about limited-time offerings and price points, but they are thinking about whether they are communicating their value effectively

Restaurant operators I’ve spoken with are really grappling with the fact that this is the buzzword of the moment. People really want to focus on value, and operators are thinking about how they can deliver on that. They are really focused right now on communicating and delivering on the value that the customers are clearly seeking.

At the same time, you have the MAHA movement, where people want to eat healthier and have fewer processed foods. Operators are asking, ‘How can I make sure that I’m offering menu options that lean into all of those things at the same time?’ You also have this treat culture, where people want to treat themselves to dishes high in sugar. So you have these conflicting trends. Yes, as operators, you want to make sure you’re offering healthy options for people who are really focused on their health, but even people who are trying to take care of their health want to treat themselves every once in a while, so you have to make sure you have those options available as well.

The report highlights tax reforms projected to free up billions for operators and workers. In practical terms, where do you expect us to see that capital flow first? Will it go to labor, investment, technology, remodels, and how visible will that impact be to consumers?

Well, you know, the One Big, Beautiful Bill is going to provide some nice tail winds to the economy this year. It’s probably going to be a bit of a staggered impact since some people will get larger tax refunds, and that should hopefully lead to more discretionary income and more restaurant sales, as well as some of that resilience in the economy that we expect to see this year. That gets us back to that $1.55 trillion number that we mentioned at the beginning, but it also speaks to why I think we’re going to grow 2.5% this year in terms of GDP. I think as we move through the course of this year, the economy will do a little bit better than perhaps people think it will at this point.

The other aspect of the One Big, Beautiful Bill is that there are a lot of incentives in there that restaurants have been fighting for for a while: to make some of those tax extenders permanent and to be able to write off some of those expenses in the year they’re expensed. Those factors, along with lower interest rates, should lead to some increased capital spending this year.

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