By Evie Liu
Most restaurants rely heavily on menu pricing to grow their sales, but there have been some notable exceptions.
In the fourth quarter, price increases alone drove all of same-store sales growth at 17 of the 23 companies tracked by Gordon Haskett analyst Jeff Farmer, while traffic was flat or negative. This includes brands such as Sweetgreen, Cracker Barrel, and Maggiano's owned by Brinker International.
Several brands stood out for growing through increased foot traffic: Dutch Bros posted 7.7% same-store sales growth with only 2% driven by pricing, Chili's posted 8.6% sales growth with 4.4% from pricing, and Domino's Pizza delivered 3.7% sales growth with zero pricing.
That's unusual in the restaurant industry and deserves a closer look from investors. Dutch Bros stock was down 30% over the past 12 months, Domino's lost 16%, and Brinker International dropped 10%. They may be in a strong position to recover once investors become more positive on restaurant stocks again.
Successful marketing, loyalty and rewards programs, digital ordering channels, and new product offerings have helped drive up the transaction volume at these restaurants, the companies mentioned in recent earnings calls.
It's worth noting that many companies -- including McDonald's, Papa John's, Restaurant Brands, Starbucks, Wendy's, Wingstop, and Yum! Brands -- do not disclose menu pricing and are therefore not included in the analysis.
Restaurants that raised prices over the past few years were looking to offset a surge in operational costs. Commodity inflation rose sharply due to supply-chain disruptions, geopolitical shocks, and transportation bottlenecks. At the same time, labor costs increased meaningfully as operators competed for workers in a tight job market.
Because restaurants operate on relatively thin margins, even modest cost inflation can quickly erode profitability. With limited ability to cut service levels or portion sizes without damaging the brand, many operators chose to pass costs through to customers via menu pricing.
From 2022 to 2025, Maggiano's has increased menu prices by 34% over the four-year period, El Pollo Loco rose prices by 32%, and Jack in the Box by 30%. Domino's, Applebee's, Darden Restaurants, and Sweetgreen, on the other hand, raised prices the least in the group -- by 12%, 18%, 18%, and 20%, respectively.
But in the past year and half, menu pricing -- the pace of price hikes measured on a year-over-year basis -- has been slowing. In the fourth quarter of 2025, average menu pricing was 2.9%, much lower than 4.2% a year earlier and 5.5% two years ago.
Looking ahead to 2026, more than half of companies said they expect the pace of price hikes to slow further. Many companies said they'd keep price gains moderate to protect traffic, rather than fully passing on rising costs to consumers.
Chipotle, for example, said it expects 1% to 2% price gains despite 3% to 4% inflation in cost of sales. Cava said it doesn't plan to raise prices in 2026 at all.
Still, Farmer noted that some restaurants -- such as Texas Roadhouse and Bloomin' Brands, the owner of Outback Steakhouse -- expect to raise prices more in 2026 due to their high reliance on beef. In January, the average price of all uncooked beef steaks was 13% higher than a year ago and 28% higher than three years ago.
Write to Evie Liu at evie.liu@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 03, 2026 15:59 ET (20:59 GMT)
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