Sunny with a slight chance of rain - 2026 looks bright for food and beverage industry - by Dennis Serpone

Seventy-five percent of all small businesses are food and liquor related…the lifeblood of America.

2026 outlook is challenging: traffic is slowing, input costs  –  especially beef  –  are rising, and consumer sentiment is weakening, pressuring margins and limiting upside.

As clouded the view of 2026 may be, there are bright spots…the most important is to recognize that the food and beverage industry is one of the only places where a non-college person can be exposed to the various disciplines of the food and beverage industry and make $100,000 to $300,000 per year.

The industry is made up from full-service, high end restaurants to the local coffee shop. For those of us who frequent eating away from home, after the ticket shock wears off, we find that credit card debt, which has never been higher at the national level, has mitigated our sensitivity to the high cost of socializing. With talk of a $2,000 stimulus check for each person, the recalculation of menu prices, and the anticipated benefits of AI in every aspect of our lives, 2026 could be an exceptional year.

It is important to understand that there is a wide disparity in the profitability of the different food purveying categories.

The National Restaurant News analyzed the top contenders for profitability:
Bars: High profit margins are driven by significant markups on alcoholic beverages, even with high startup costs.

Ghost Kitchens: Profitability comes from drastically reduced overhead (no dining room, minimal staff) and built-in advertising on delivery apps.

Pizzerias: Versatile, popular, and can handle high volumes via dine-in, delivery, and pickup, with low-cost ingredients like dough and cheese. 

Diners and Quick Service Restaurants QSR (Fast Food/Fast Casual): Benefit from efficient, often lower-cost ingredients (breakfast foods in diners), high customer turnover, and streamlined operations, leading to higher profit margins than full-service restaurants.

Coffee Shops (Chains): Franchise data shows strong margins (12-18%), similar to pizza, due to high demand for beverages.

The question that buyers are faced with once the decision has been made to participate in the restaurant arena is why do these models work?

• Low Overhead: Ghost kitchens (and food trucks) avoid expensive rent and large dining room staff.

• High-Margin Products: Alcohol (bars) and coffee/tea offer excellent markups.

• Volume & Efficiency: QSRs, pizza places, and diners serve many customers quickly with optimized repetitive processes.

• Popularity: Pizza and coffee have broad appeal, ensuring consistent demand.

Ultimately, strong management, location, and cost control are crucial for success in any restaurant type…with strong management the key component.

What is the most profitable food to sell in a restaurant?
After 10 years of operating a chain of restaurants and 46 years as a restaurant broker certain facets of our industry become obvious. Historically, the most profitable food segments of our industry are:

1. Burgers. Burgers are not only an American favorite but also a profitable choice for restaurant operators...blending with an alcohol component, it becomes an unbeatable concept…adding entertainment ensures exceptional profitability.

2. Pizzas. Pizza is versatile and can offer substantial profits...

3. Pasta dishes...

4. Sandwiches...

5. Vegetables and vegetarian dishes.

It is obvious that in 2026, QSRs may stand to reap the rewards of consumer spending anxiety, as diners trade down to casual and fast casual to save money.

For any restaurant to survive, an adept accountant and bookkeeping system are critical. Owners often get into trouble because they lose track of their operating financials.

• 30% Food Costs (COGS): Includes all ingredients, drinks, and condiments. 

• 30% Labor Costs: Covers wages, salaries, benefits, and payroll taxes for all staff. 

• 30% Overhead Costs: All other operating expenses, like rent, utilities, marketing, insurance, and maintenance. Ideally, rent, as your biggest fixed expense should never exceed 10% of your sales, with a comfortable target being 5% to ensure significant profitability.

• 10% Profit: The net income after all expenses are paid. 

What does this all mean for 2026? The consulting division of the National Restaurant Exchange has proven that the key to success of any food and beverage concept relies directly on the strength and experience of management.

If the owner has addressed the key components of success for a new venture…accessibility, visibility, sufficient parking, and a competitive advantage, success then falls on the strength and experience of management. 

When it comes to buying or selling a restaurant, it’s not the food or liquor being sold…it’s the profitability. What seems to get lost in the mix is that a seller is selling his bottom line, his annual net profit, and the buyer is paying for that annualized net profit. Our restaurant specialists are experts in analyzing financial statements to determine the real net profit which directly translates into ‘Market Value’.

Dennis Serpone is founder of the National Restaurant Exchange, Wakefield, Mass.