The National Restaurant Association now forecasts consumer price inflation of 3.5% in 2026, up from 2.6% in 2025, while real disposable personal income — a key driver of restaurant sales — is projected to grow just 0.5%, down from 1.6% in 2025 and 2.9% in 2024. That combination frames a year in which operators will face rising input costs against a consumer base with sharply eroding purchasing power.

The Association's third-quarter Consumer Insights survey captures the split. While 65% of adults rated their financial well-being positively, nearly four in ten said their finances had worsened over the past year, with younger and lower-income consumers under the greatest strain. Restaurants remain a top discretionary priority: more than half of consumers dined out in the previous week, and half ordered takeout or delivery.

But affordability is already bending behavior. Nearly four in ten consumers reported spending less at restaurants than in the prior quarter, leaning on discounts, trading down to lower-priced menu options, and cutting add-on purchases — a direct squeeze on check averages and attach rates.

What does the labor market look like for operators?

The labor pool keeps shrinking. Labor force participation stood near a five-year low in August, at 61.6%, up only slightly from 61.4% in July — the weakest reading since February 2021. The civilian labor force grew from 169.09 million in July to 169.78 million in August, but remains down 2.40 million since the start of 2026. That leaves restaurant operators competing for a contracting pool of potential workers and likely facing ongoing recruiting and retention costs.

Hiring data is mixed. Nonfarm payrolls added 162,000 jobs in August — more than triple the consensus forecast of roughly 50,000 — and June and July gains were revised upward by a combined 55,000. Through the first eight months of 2026, the economy has added 643,000 nonfarm jobs, with employment rising in seven of those months. The unemployment rate held at 4.1% for a second straight month, its lowest level since June 2025.

The Association projects the economy will add a net 900,000 jobs in 2026. That follows weak growth of just 116,000 nonfarm payroll workers in 2025, the slowest annual pace since 2020. Even so, 2026 would mark the sixth consecutive year of payroll employment growth, adding nearly 5 million jobs since the end of 2022.

Why is inflation accelerating again?

Energy costs are the trigger. The conflict with Iran has pushed petroleum prices significantly higher, reversing several years of moderating inflation after the CPI peaked at 8.0% in 2022 — the fastest annual increase in four decades. The Federal Open Market Committee raised short-term interest rates at its September 15-16 meeting to push inflation back toward the Fed's 2% target, and further hikes are expected.

Relief is possible but not immediate. If tensions ease and the Strait of Hormuz reopens, energy markets could stabilize and moderate broader price pressures. Until then, operators should expect elevated gasoline prices to keep pressure on household budgets and away-from-home spending.

What is the broader economic picture?

Real GDP is forecast to rise 2.2% at the annual rate in 2026, up from 2.1% in 2025. Consumer spending continues to benefit from solid wage gains and healthy household incomes, particularly among higher-income households, and business investment — especially in artificial intelligence — has helped offset consumer uncertainty.

For operators, the Association's read is one of cautious optimism with uneven growth. Continued expansion, rising household incomes and consumers' durable preference for restaurant occasions cut one way; elevated operating costs, labor constraints, uncertain demand and widespread affordability concerns cut the other. Notably, many operators remain hesitant to pass through higher costs amid soft traffic trends, even as labor, food and other expenses keep rising — a margin squeeze that compresses profitability rather than menu prices.

The Association's bottom line for the year ahead: success will depend on balancing value, hospitality, innovation and operational efficiency, with the industry's resilience tested by an increasingly divided consumer base.