Restaurant sales expected to top $1.55 trillion in 2026

Restaurants are entering a new era of recalibration. Diners are drinking less, squeezing one of the industry’s most reliable profit centers. AI is reshaping how restaurants get discovered online. And automation is creeping deeper into the kitchen, raising questions about labor, cost and craft. 

Meanwhile, headlines ripple across the industry—from labor policy to cultural shifts at the bar.

But first, an update from last week. Noma chef Rene Redzepi resigned after blowback from the NY Times takedown.

Fit the bill. Proposed legislation would offer grants to restaurants affected by ICE crackdowns. 

Go fish. This Bay Area sushi restaurant has a brilliant new business model.

Priced out. What a $25 minimum wage could mean for the D.C. area restaurants. 

Safe haven. L.A.’s Persian restaurants offer sanctuary, support as Tehrangeles reacts to war.

Bot or not. Why this Uber co-founder is betting big on automated food.

Restaurants are struggling as diners drink less

Americans are drinking less alcohol at restaurants, part of a broader cultural shift toward moderation. Health concerns, rising prices and changing attitudes, especially among younger diners, are pushing restaurants to expand nonalcoholic offerings like zero-proof cocktails and low-ABV drinks. Some operators say nonalcoholic drinks, while helpful, can’t fill the financial gap, as they require the same amount of labor and high-quality ingredients, but consumers won’t pay the same price.

Why it matters: Alcohol has long been one of restaurants’ most profitable categories, so declining drink sales threaten margins. Operators are responding by investing in creative nonalcoholic programs, low-alcohol cocktails and premium alternatives that still command high prices. The shift is forcing restaurants to rethink beverage strategy. (New York Times)

Your AI SEO checklist for restaurants is here

Traditional SEO tactics are becoming less relevant as AI search tools like ChatGPT, Google Gemini and Perplexity AI pull information from signals across the web rather than just websites. Restaurants should focus on consistent listings, highlighting positive reviews and mentions, specifying their offerings and widely distributing content to increase visibility in AI-generated search answers. 

Why it matters: As diners increasingly use AI tools to decide where to eat, visibility in AI-generated answers could become as important as ranking on traditional search engines. Restaurants that strengthen online signals—reviews, directory listings and media mentions—can surface faster in AI results, potentially driving discovery and traffic without relying solely on Google rankings. (Modern Restaurant Management)

NPR pit a human chef against a robot chef; here’s what happened

An NPR "Planet Money" episode pits a human chef against a wok-cooking robot to explore how automation could reshape restaurant kitchens. The robot is faster, cheaper and consistent, but the human wins on flavor in most dishes. Economists say automation could both displace workers and create new roles.

Why it matters: With restaurant margins being tighter than ever, automation is appealing because robots can cook faster and cost far less per hour than skilled chefs. But the trade-off is quality and tradition. Operators will increasingly face a strategic choice: prioritize efficiency and labor savings, or preserve craft cooking that diners may value more. (NPR Planet Money)

$1.55 trillion

Projection for nationwide restaurant sales in 2026 after adjusting for inflation. (FEDA)

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The Prep is written by Kelly Dobkin and edited by Bianca Prieto.