Rethinking Hospitality: How Companies Are Preparing For 2026

From Where We Sit

As a recruiting partner to so many great brands and leaders, we sit in a unique position. We get unfiltered access to the stories, struggles, and successes of the people we work alongside every day.

And the reality is, the health of their businesses have a direct impact on ours. If the industry is struggling, it’s likely we are feeling that too. If the industry is thriving, we thrive. We’re tied to the industry we proudly serve.

In recent weeks, our team has spent a lot of time talking internally about how we need to prepare for the state of hiring in 2026. But it made us equally curious about how operators and executives are approaching the future when costs are higher than ever, labor continues to rise, and running a restaurant feels more complex than ever.

So we asked.

We came up with a series of honest questions to pose to the leaders we trust, all actively running hospitality businesses today. Some of what we heard was eye opening. Some of it confirmed exactly what we already knew.

What follows is not a survey recap. It’s a reflection on the themes that kept coming up and what they may signal about where our industry is headed in 2026 and beyond.

Less Reaction, More Intention

There were times last year when it felt like survival for many of our partners. There’s no sugarcoating that. Operators were reacting in real time to tariffs, inflation, labor shortages, supply chain disruptions, and shifting guest behavior. Trends were out the window, and decisions were often made out of necessity.

What came out of that is renewed attention to strategy. Many operators are intentionally stepping back and rethinking how their businesses operate. They are asking harder questions about workflow, labor models, prep, speed, systems, and consistency. There is a real effort to simplify where possible and build systems that can hold up under pressure instead of constantly reacting to it.

“The last few years were about getting through the week. Now we’re finally stepping back and rebuilding how the business actually runs.”

It feels less like putting out fires and more like rebuilding the foundation.

Hoping Won’t Bring Costs Down

One of the recurring themes with everyone we talked to is this: Rising costs are being treated as the new baseline rather than something that will magically improve. Instead of waiting for relief, operators are strategizing.

“We stopped waiting for costs to come down. Once you accept that this is the baseline, you can actually start making smart decisions.”

That shift shows up in better training, stronger execution, waste reducing measures, and an overall sharper focus on efficiency. The mindset has moved from hoping margins return to actively protecting them through discipline and execution.

“If your plan relies on food or labor getting cheaper, it’s probably not much of a plan.”

That shift in thinking is important. When operators stop hoping for a correction and start planning around reality, the conversation becomes more strategic. It leads to better menu engineering, more disciplined purchasing, tighter labor models, and sounder pricing.

Margins aren’t protected by optimism, they are protected by execution. The strongest companies are not panicking, but they are recalibrating. They are refining and looking for ways to make incremental gains.

Using Technology to Get Time Back

Technology (and more specifically AI) came up in every conversation, and there was definitely a trend we picked up on. Operators are putting an emphasis on tech to improve organization and reduce time intensive tasks.

One of our quick-scaling restaurant partners is implementing an AI driven screening platform to replace the initial screen with a chatbot. The goal is to filter for qualified candidates early so leaders are only spending time interviewing people who already meet the baseline requirements.

Beyond hiring, companies are also beginning to explore how AI can support the guest experience. From analyzing guest feedback and online reviews to identifying recurring themes, to assisting with menu engineering, pricing decisions, and COGS tracking, these tools are helping make more informed decisions faster. When used thoughtfully, AI can highlight inefficiencies, identify new opportunities, and provide further clarity around what is working and what is not, without replacing the instinct and judgment that great operators rely on every day.

The overall tone we heard from multiple sources can be summed up perfectly with this quote: “We’re using technology to buy back time, not to replace people.”

The goal is to build higher performing teams, and that starts by giving them back the time and focus to do what they do best. Technology can fill the gaps.

The Barbell Effect

There was a recent restaurant industry article I read that highlighted how the industry is beginning to split between value brands and high-end experiences. Ongoing financial concern for many families is pushing cost to the forefront of dining decisions, while higher-income consumers are still dining out, but favoring higher-end restaurants.

This is leaving mid-tier brands in a tough spot. They are too expensive to compete on value, but not high-end enough to justify premium pricing. As costs rise, many of these concepts are getting squeezed from both sides, and we’re likely to see more of them forced to adapt or die as the barbell effect continues to reshape the industry. What stood out to me is how many operators are intentionally trying to live in the middle.

Guests still want places that feel special. They want great food, beautiful spaces, and genuine hospitality. At the same time, they want to return often. Concepts that feel too expensive or too precious limit frequency.

“We’re trying to look and feel premium without asking people to save up just to walk through the door.”

Many leaders are focused on delivering an elevated experience at price points that feel accessible. Not cheap, but in line with the overall experience you’re getting. The kind of place you can visit regularly, not just for special occasions.

That balance feels like a key differentiator heading into 2026, and we could see some companies and restaurants close as consumers prioritize affordability. So, is this a real trend or just a temporary shift until costs come down? Only time will tell.

Rethinking Beverage

I received a call from a very concerned Director of Operations just before the holidays. Their company was facing a significant decline YOY in alcohol sales, and it was impacting them to the point of considering cuts elsewhere to make up for it. That really had me thinking about how other companies were strategizing for this. Surely everyone is in the same boat, and new data tells us that more and more Americans are scaling back on (or completely cutting out) alcohol.

With all of the leaders we’ve talked to, alcohol consumption trends were a hot topic, especially among younger guests. But the response was surprisingly not panic. Instead, most companies seem to be embracing these trends and getting creative. Zero proof and low proof offerings are being taken more seriously. One of our contributors told us, “It’s less about pushing drinks and more about giving guests options that actually fit how they’re living.” That’s a great way to put it. Beverage programs are being designed to complement food and overall experience rather than carry the business on their own. Some operators are also leaning into food innovation and better service flow to protect overall revenue.

It’s not that alcoholic beverages are a thing of the past – quite the opposite – but with younger consumers opting for NA offerings, there is a real opportunity to change the programming to be more inclusive, and we’re seeing that as a strong trend this year.

Investing in People

Labor has been the hardest lever to pull over the last few years. Wages grew quickly in a short period of time, and operators have been adjusting on the fly ever since. While the pace of wage growth has begun to cool in some markets, the reset remains.

In certain markets, rising minimum wages are going to create a ripple effect in a major way. Cities like San Diego have approved plans to move hospitality wages toward $25 an hour. In New York City, minimum wage continues to rise, currently sitting at $17 an hour. Here in Illinois, we’ve already climbed to $14 an hour and are scheduled to hit $15 statewide, with Chicago even higher. These are big shifts, and operators need to be planning for them now.

Everyone is trying to solve for these increases. But the best leaders are not just focused on controlling cost. They’re focused on increasing performance.

“If we don’t invest in leaders now, everything else eventually breaks.”

Despite wages rising and continued competition for talent, most operators did not talk about drastically changing who they hire. What they did talk about was how they develop people once they are in the door. That is music to our ears. We’ve long preached that ongoing training and development initiatives are the differentiator between the good and the great companies, and seeing more emphasis in this area is promising when it comes to retention.

There is a stronger emphasis on hiring leaders who can coach, teach, and communicate effectively with their teams. Many are building internal pipelines so future managers and leaders come from within. The belief is that investing in people protects culture and, equally important, reduces turnover as the business grows. It’s a longer game, but one that feels sustainable.

An Optimistic Undertone

There is REAL optimism as things begin to pick up this year. People still crave connection. Hospitality still matters. Dining out still plays a big part in how people live and celebrate.

At the same time, there is a clear understanding that this industry is becoming less forgiving. Inefficiency and complacency will be exposed faster than ever. The margin for error is shrinking. Better controls, technology, innovation, and a willingness to think differently will help brands not only survive, but thrive in the future. The most successful companies are going to be ones willing to evolve.

A Final Thought

The point of this exercise wasn’t to diagnose problems, but to understand how serious operators are preparing for what they can’t control.

The cost of labor will rise.
Consumer behavior will shift.
Trends will come and go.
Costs will fluctuate.
None of that is optional.

If the past six years taught this industry anything, it’s that hospitality is incredibly resilient. But resilience alone is not enough. As one of our own likes to say, “hope is not a business plan.” Intentional strategy and strong leadership are what will define the next chapter for hospitality’s best brands.

We appreciate everyone who took time out of their busy schedule to give us some great feedback and insights. Looking forward to continuing the conversation and revisiting this again at the end of the year. Until then…