Welcome to Duncan’s Diner. The number of independent restaurants declined in 2025 amid a complicated operating environment that’s expected to continue this year. Meanwhile, one chain is ridding itself of all its microwaves while another is using AI to predict demand. These stories and more This Week in Foodservice.

If it seemed like 2025 was a complicated one for the foodservice industry, that’s only because it was. What’s on the menu for 2026? More of the same, of course.

Let’s start with the good news: restaurant industry sales are expected to hit $1.55 trillion in 2026, per the National Restaurant Association’s 2026 State of the Industry Report. This represents 1.3% in real growth, and we all agree that real growth is the best kind of growth. Restaurants remain a center-of-the-plate dining option for consumers, accounting for 53% of their food dollar, per the NRA. And 61% of consumers say restaurants represent an integral part of their lifestyles and 70% said they would use restaurants more if they could, the NRA study added.

But an uncertain economic environment damped restaurant usage in 2025. In 2025, roughly 40% of consumers said they frequented restaurants less than they did during the previous year, per the NRA report. That is consistent with what restaurant operators experienced, with approximately 60% reporting a decline in traffic last year.

At the same time traffic was declining, restaurants experienced rising costs on a variety of fronts, most notably food. In fact, 82% of operators reported food costs increased in 2025, compared to only 6% who saw a decline in this area. Also, 68% of operators blamed these rising costs on tariffs.

The combination of elevated costs and declining customer traffic severely impacted margins to the point that 42% of the operators participating in the NRA study said their restaurants were not profitable.

It comes as no surprise, then, that 60% of operators said business conditions worsened in 2025, compared with 25% who said things stayed the same and 12% who reported an improvement.

Despite last year’s challenges remaining present and top of mind, operators’ outlook for 2026 is best described as cautiously optimistic.

Along those lines, 32% of full-service operators expect sales to increase in 2026 and another 47% say sales will be the same as they were in 2025. Only 21% of full-service operators project a decrease in sales for 2026. Similarly, among limited service restaurants, 29% predict sales will increase in 2026 and 44% expect sales will hold consistent with 2025’s levels. Only 27% of limited-service restaurants project sales will decline in 2026.

Foodservice News

• Wonder has added another plank to its self-described mealtime platform. The New York-based company acquired Blue Ribbon Fried Chicken, a fast-casual concept. As part of the agreement, Wonder acquired the Blue Ribbon Fried Chicken brand, along with its physical restaurant in Manhattan and its current employees. As part of Wonder, Blue Ribbon Fried Chicken's East Village restaurant will continue operating as usual, with no planned changes to day-to-day operations. The company also plans to introduce Blue Ribbon Fried Chicken as a concept at a Wonder location in New York City in 2026. The acquisition comes as Wonder is rolling out two new concepts: Pop Salad and El Diez Mexican Bowls, both of which offer full meals at $10 or less, per a Chain Store Age story.
• If it seems like there are fewer independent restaurants these days that’s because it’s true. The total number of independent restaurants in the U.S. declined 2.5% in 2025, reflecting a net loss of more than 9,500 locations, per data from Technomic. Full-service restaurants felt the brunt of this contraction, seeing their number of units decline by 2.6%. The number of limited service restaurants declined by 1.8%.
• A Dunkin’ franchisee is using AI to count donuts. To better predict donut demand and cut down on food waste, the Bluemont Group is using an AI system called Do’Cast, per a Fast Company story. The system uses in-store cameras to track inventory in real time and forecast demand for each type of donut.
• Steak ‘n Shake expects is going microwaves free, per a USA Today story. The chain plans to have all of the microwaves removed from its restaurants by mid-April. This is the latest update the chain has made as it strives to make its food healthier.
• McDonald's efforts to improve its value perception seems to be paying off. The company reported same-store sales increased 6.8% during its fourth fiscal quarter and 2.0% for the year. McDonald’s Extra Value Meals helped improve the chain’s value perception, Restaurant Dive reported.
• The end of the year was not kind to Wendy’s. The chain reported same-store sales declined 11.3% during its fourth fiscal quarter of 2025. To help enhance franchisee profitability the chain is giving operators more flexibility on their breakfast hours, per a Restaurant Business story. Wendy’s had previously announced plans to close roughly 300 units, which is 5% to 6% of its system. For the full year, Wendy’s reported system wide sales declined 5.2%.
• Red Lobster may close more restaurants. As the chain looks to optimize its footprint and cut expenses, it is reviewing real estate and leases, per a FSR Magazine story. This news comes amid something of a turnaround for the chain, which saw sales increase 10% year over year, the story added, thanks to more visits from younger customers.
• A teenager used his Make-A-Wish request in a unique way. Most people know the Make-A-Wish Foundation because of the rewards it gives children battling serious illnesses. Two years ago, Make-A-Wish approached Duncan Simmons to see if the teenager would like a reward for the grit he showed in battling Burkitt leukemia – a fight he eventually won. Instead of asking for a trip or some other physical gift, however, Simmons chose to help the kids whose days are spent at the UPMC Children's Hospital in Pittsburgh, by starting a foundation to help them “get the food that they like to eat.” The inspiration came during his treatments when Simmons was feeling low and was not able to eat much but the few bites he could take from his favorite restaurants “were heaven.” The net result of this vision is Duncan’s Diner Foundation. Make-A-Wish made the initial donation, followed by DoorDash and c-store chain Sheetz. So far, Duncan’s Diner has raised $29,000, making it possible to serve 1,600 families, per an email sent to FE&S.

Economic News

• The rate of inflation increased 2.4% for the 12-months ending January 2026, per the S. Bureau of Labor Statistics. This represents the a 0.3% decline from December and the lowest growth rate since May of 2025, per a CNBC analysis. Economists had projected a 2.5% growth rate for January. Restaurant prices increased 4.0% and grocery store prices grew 2.1%.
• Sales of existing homes declined 8.4% in January compared to the previous month, per data from the National Association of Realtors. Sales of existing homes also declined 4.4% compared to January of 2025. While the NAR notes “affordability conditions are improving,” below normal temperatures and above-normal precipitation in the month may have helped dampen sales.
• S. employers added 130,000 jobs in January, per the U.S. Bureau of Labor Statistics. This significantly greater than the net gain of 75,000 positions economists had projected and only 51,000 less than all the jobs businesses added in 2025, per an analysis from CNN. Business sectors realizing job gains include in health care, social assistance, and construction, while federal government and financial activities lost jobs.
• Initial claims totaled 227,000 for the week-ending February 7, 2026. This represents a decrease of 5,000 from the previous week, per data from the U.S. Department of Labor. The 4-week moving average was 219,500, an increase of 7,000 from the previous week.
• American consumers and companies paid nearly 90% of the cost of the tariffs administered by the Trump Administration in 2025, per a story from USA Today citing a report from the Federal Reserve Bank of New York. Citing data from the Tax Foundation, the story added that the tariffs amounted to a tax increase of $1,000 per household in 2025. That’s expected to grow to $1,300 in 2026.