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Kim Kardashian shares brain aneurysm diagnosis

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Nov. 6, 2025, 11:21 AM ESTBy Rob WileLike much else in the U.S. economy, the casual restaurant sector is increasingly bifurcating into a handful of winners and a growing group of laggards. At issue are two seemingly irreconcilable challenges: Operating costs that continue to surge, forcing companies to raise prices in order to maintain their profit margins — and a consumer base anchored by low and middle-income households that faces growing financial instability amid a weakening job market.It’s led to pain for much of the chain-restaurant sector — with some established but long-struggling brands announcing that they are exploring potential sales. But as consumers’ perception of value evolves, and their wallets tighten, some surprising stalwarts in the sit-down sector are making a comeback. “That perception of affordable fast-food has gone out the window,” said Alicia Kelso, executive editor of Nation’s Restaurant News, an industry publication. The winnersThe biggest beneficiary of the current environment has been the casual table-service dining sector, where Chili’s is leading the pack.Last week, Chili’s parent company reported that sales had increased a massive 21% in its most recent quarter, with foot traffic surging 13%. The chain has undertaken a series of operational improvements like more efficient ovens, sprucing up locations, and trimming its menu offerings. But what is changing faster than the restaurants themselves is that consumers are increasingly willing to spend a little more for table service and equivalent or even higher-quality food than they can get at traditional fast-food and fast-casual spots, Kelso said. The same effect is happening at chains like Applebees and Olive Garden, each of which also posted sales gains in their latest quarters. Texas Roadhouse is also expected to support steady sales growth Thursday. “As people have less money to spend at restaurants, they’re looking for more bang for their buck,” Kelso said. “These places have swooped in and said, ‘We are here for you.’”The losersThe current environment has changed the definition of value, she said. No longer does it simply mean the cheapest option. That’s led to struggles for several other fast-food players. On Wednesday, McDonald’s said traffic among lower-income diners fell by nearly 10% during the most recent quarter, even as it reported sales growth that topped Wall Street estimates. Other chains have also begun highlighting the concerns of less-well-off customers. Wingstop saw domestic sales decline 5.6% in its most recent quarter. Chipotle cut its sales outlook for the third-straight quarter last week. “We remain in a low-hire, low-fire labor market,” Andrew Charles, a research analyst and managing director at TD Securities financial group, said in a note published last week. “That translates into a consumer outlook that remains segmented, with middle to low income earners continuing to struggle as well as entry-level young workers who have seen demand for their labor decline.”The consumer struggles come alongside seemingly unending cost increases for chains. Alongside the price of beef, which has surged to record highs, restaurants also face rising costs for rent and electricity. In some markets, labor costs have also jumped since President Donald Trump ramped up deportations and federal immigration enforcement.Since April 2020, the cost of eating out has climbed approximately 33%, according to Bureau of Labor Statistics data. The outlookThe challenging environment for restaurants has resulted in a flurry of announcements indicating entire brands may be getting new ownership. On Tuesday, the parent company of Pizza Hut announced it was putting the stalwart restaurant chain up for sale after years of struggles. Denny’s announced a day earlier that it was being taken private in a $620 million deal that is slated to close early next year. And Apollo Global Management has withdrawn a $2.1 billion bid for Papa John’s pizza restaurants, amid ongoing fears about the trajectory of consumer spending. “It speaks to how intensely pressured the industry is right now,” Kelso said of the spate of sale statements. While some of these chains have faced ongoing issues, others are experiencing abrupt downturns after enjoying recent periods of strength — with no turnaround in sight. After more than half a decade of largely uninterrupted stock-price gains, Chipotle shares have declined by nearly 50% in 2025. Similar scenarios are playing out for the Mediterranean-focused chain Cava and the salad chain Sweetgreen, both of which reported weaker earnings in their most recent quarters after posting impressive gains in 2024. All three of these restaurants are part of what the industry refers to as the “fast casual” segment, a slightly more upscale version of old-school fast food that tends to cater to younger, working-professional diners.This segment is facing a particularly challenging outlook.“When you look at different age demographics of fast casual, the 25- to 34-year-old consumer seems to be impacted a bit more than others, and fast casual tends to have a higher concentration of those consumers within their guest portfolio,” Cava’s chief financial officer, Tricia Tolivar, said in a recent interview with CNBC.“It appears that the consumer is being more thoughtful around their dining occasions, and how frequently they are doing that,” she said.Rob WileRob Wile is a Pulitzer Prize-winning journalist covering breaking business stories for NBCNews.com.

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