“Should I stay, or should I go”: Grocery vs. Restaurants
“More than a rough patch: Recent restaurant closures signal market correction. Persistent traffic declines, rising costs and an oversaturated market are forcing brands to make tough decisions, and robust chains are taking advantage of the moment, experts say.
endy’s, Pizza Hut, Jack in the Box and other restaurant brands have recently closed stores, raising questions about the industry’s health. Analysts say the closures are the inevitable result of years of dwindling traffic and mounting cost pressures in a market that has simply grown too crowded.
“The restaurant space has been tough. There’s a lot of competition, so it’s a very saturated market to begin with,” said Victor Fernandez, chief insights officer at Black Box Intelligence.
In addition to ballooning food and labor costs, operators are dealing with higher insurance premiums, further straining their finances, said Ari Felhandler, an equity analyst covering the consumer sector at Morningstar. At the same time, the industry has remained stubbornly reliant on value promotions, further squeezing margins. With same-store sales under constant pressure, fixed costs such as rent and energy have begun eating a larger share of revenue — a dynamic especially painful for those already running on thin margins.
The widening price gap between restaurants and groceries has worsened the backdrop, especially given grocers’ lower labor costs, Felhandler said.
U.S. restaurant locations hit an all-time high of over 860,000 as of November 2025. Still, both openings and closures slowed consistently throughout 2025, Huy Do, market researcher and trendologist at Datassential, said during a March 12 webinar.
“The good part is that the U.S. restaurant industry has been growing,” Do said. “But the pace of growth has been slower and slower every month.”
A closer examination reveals that smaller restaurant chains, including those with 50 or fewer units, are plateauing or declining in unit count. By contrast, the largest national brands are doing “the heaviest of the lifting” on new openings, Do said.
Geographically, traditional high-cost markets like California and New York are in “stabilization mode or even in the shrinkage mode,” Do said. At the same time, meaningful expansion is concentrated in Sun Belt states. Dallas, Houston, Atlanta, Orlando and Tampa are the fastest-growing metro areas, Do said.
For many individual locations, the math has gotten worse over time.” ~ by By Michael Brady
Diners are becoming less loyal: Tillster
“Leading brands in the restaurant sector could face greater competition from c-stores and grocery chains. Dive Brief:
Consumers are becoming less loyal to specific restaurant brands, according to a new report from Tillster.
About 45% of surveyed consumers said their favorite restaurant brand changed in the last year, compared to 33% in 2025. The firm surveyed 2,144 consumers in the U.S. about their dining habits for the report.
Many consumers are cutting back on restaurant visits to save money, or switching to grocery and c-store occasions, Tillster found. Lower prices are no longer the ultimate determining factor in consumer behavior as quality and convenience become more important.
While this shift in sensitivity indicates stabilization and adaptation to current price levels, according to Tillster, consumers are still looking for opportunities to save money, particularly in restaurant delivery. A majority (61%) of consumers abandoned a delivery order due to service fees, while roughly half have switched to pickup channels as a way to minimize fees.
Some consumers are shifting their spend away from restaurants entirely, with 36% visiting grocery stores more frequently and 33% going to c-stores more often. These trends, Tillster found, reflect a mix of price sensitivity and preference for convenience. “ ~ by Aneurin Canham-Clyne
