The U.S. food and beverage industry enters 2026 at a crossroads, shaped by persistent inflation, shifting consumer behaviors and rapid technological disruption. While inflation has cooled from its pandemic-era peak, grocery and restaurant prices remain 20% to 25% higher than before, and the impact is felt unevenly across the consumer landscape.
According to Jim Kenwood, head of Food & Beverage for PNC Bank, “The most pressing question for businesses as we move toward 2026 is no longer just, ‘How are my customers doing?’ but, ‘How are my customers’ customers faring?’” The answer reveals a widening gap: older and higher-income consumers are weathering the storm, while younger and lower-income groups are struggling, increasingly relying on debt to fund everyday purchases. Credit card balances have soared to record highs, and delinquency rates are approaching those seen during the great recession.
This financial pressure is reshaping demand, causing consumers to stretch their dollars, seeking value at every turn. Restaurant visits have become less frequent, with diners opting for deals and lower-priced value-menu items when they do order out. Grocery channels, meanwhile, are experiencing modest growth as shoppers gravitate toward private labels and discount retailers like Aldi and Trader Joe’s. The “treasure hunt” experience offered by these stores, with curated assortments and rotating stock, appeals especially to younger consumers looking for both value and discovery.
Private-label products now represent nearly a quarter of industry sales, as consumers seek affordable alternatives without sacrificing quality. At the same time, traditional grocery retailers are resisting further price hikes, focusing instead on operational efficiency and cost containment to protect margins. Restaurants, facing negative same-store sales and traffic, are innovating with value menus, promotions and limited time offerings for driving traffic.
Inflation remains a stubborn challenge. Although the headline rate has slowed to around 3%, it continues to outpace wage growth, which is running at just 1.9% annually. This means that, for many, purchasing power is eroding. Companies are absorbing some cost increases, but a significant portion is still being passed on to consumers. Tariff changes and wage hikes—such as the $20 minimum wage at some fast-food chains—are further squeezing margins across the industry.
In response, companies are turning to technology for solutions. Artificial intelligence and machine learning are being rapidly adopted for inventory management, demand forecasting and supply chain optimization. Predictive analytics and virtual sensors are helping businesses reduce inefficiencies and make faster, data-driven decisions. Lenders and advisors, including PNC, are stepping up with deep industry benchmarking, modeling and working capital solutions to help clients navigate volatility, enhance profitability and optimize return on invested capital.
Health and wellness trends are also reshaping the industry. The rise of GLP-1 medications and the “Make America Healthy Again” movement are driving consumers toward healthier, less processed foods. Clean labeling, natural flavors and functional ingredients like protein and probiotics are in high demand, prompting companies to reformulate products—even at higher costs. Nearly 60% of consumers are increasing their protein intake, and functional foods with digestive benefits, are proliferating. Plant-based options are evolving, with a focus on authenticity and nutrition rather than imitation, and transparency is more important than ever.
Retail channels are evolving in tandem. Retailers are leveraging AI-powered loyalty programs and health scoring systems to personalize the shopping experience and guide consumer choices. Publicly traded companies are streamlining their portfolios, divesting non-core assets, and pursuing strategic acquisitions to align with health and innovation trends.
Looking ahead, the food and beverage industry in 2026 will be defined by resilience, adaptability and innovation. Companies that prioritize consumer health, value and transparency—while leveraging technology and operational excellence—will be best positioned to thrive. As always, PNC stands ready to provide industry knowledge, benchmarking and financial solutions to help clients succeed in this dynamic environment.
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PNC’s Food & Beverage team combines industry and financial experience with local relationship management to offer tailored financial solutions to Food & Beverage companies across the value chain. For more information, reach out to your Relationship Manager or contact us.
