AlixPartners Analyzed 90,000 Restaurants. The Math Behind the Value War Has Fundamentally Changed.

The restaurant industry has spent three years raising prices. AlixPartners just proved it stopped working.

In a March 2026 analysis using its Proprietary Pricing Platform, the consulting firm examined 90,000 restaurant locations and hundreds of thousands of individual menu items. The headline finding: menu prices increased faster than inflation, with core basket items rising 3.0% and overall prices climbing 2.8%, both above the 2.6% Consumer Price Index. But average transaction values did not keep pace, a gap that signals consumers are trading down to cheaper items, shifting product mix away from premium offerings, and using promotions to offset sticker shock.

That gap between posted prices and actual spending is the clearest evidence yet that the restaurant industry's pricing engine has broken down.

The Trade-Down Economy Is Accelerating

AlixPartners' consumer research backs the transaction data. Across a 13,000-consumer survey spanning nine countries, the firm found that planned spending intentions swung negative by more than 60 percentage points year over year. Even high-income consumers who said they would spend more in 2025 reversed course for 2026.

McKinsey's State of the U.S. Consumer 2026 report puts a sharper point on it: three in four American consumers now say they regularly switch to cheaper brands, and 79% report that tariff-driven price increases have changed their purchasing behavior.

The macro backdrop just got worse. Oxford Economics revised its U.S. GDP growth forecast from 2.5% to 1.9% in March 2026, projecting the slowest annual consumption growth since 2013 (excluding the pandemic year). Economists Bernard Yaros and Michael Pearce cited the surge in gasoline prices, which hit a national average of $3.94 per gallon by late March, up more than a dollar in a single month following the onset of the Iran conflict on February 28. Bank of America Institute data showed gas-related card spending jumped 14.4% year over year in the week ending March 14, compared to running 5% below the prior year before the conflict began.

"We had anticipated a lift in spending from a bumper tax refund season," Yaros and Pearce wrote, "but the rise in gasoline prices, if sustained, would more than offset that boost."

Every dollar spent on gas is a dollar not spent on a restaurant meal. And the lower-income consumers who drive QSR traffic volumes are the ones most exposed to that trade-off.

$3 Is the New $1

The pricing pressure has already forced the industry's largest player to act. McDonald's will launch McValue 2.0 in April 2026, a menu of items priced at $3 or less alongside $4 breakfast bundles including a McMuffin, hash brown, and coffee. Individual items like a sausage biscuit and 4-piece Chicken McNuggets will carry sub-$3 price tags. The initiative, first reported by The Wall Street Journal on March 11, targets lower-income consumers who have pulled back on visits.

The move comes after McDonald's posted 6.8% U.S. same-store sales growth in Q4 2025, its best quarter in roughly two years. But that growth was fueled almost entirely by promotions and discounts, not organic demand. CEO Chris Kempczinski cautioned that the company would not subsidize franchisee pricing permanently.

Taco Bell moved first, launching its Luxe Value Menu with 10 items priced between $1.19 and $2.99. As Restaurant Business editor Jonathan Maze observed on March 19: "Fast-forward 17 years [from the Great Recession Dollar Menu era] and the economy is split in two, with higher-end consumers spending as if nothing is wrong and the roughly half of the population with lower incomes cutting back."

During the Great Recession, the $1 price point became the industry's weapon of choice. Today, food costs are higher, wages have climbed, delivery fees have reshaped unit economics, and insurance and swipe fees have expanded. The industry's cost structure no longer supports $1 items at scale, which is why $3 has become the new floor.

Performance Is Deeply Local

One of AlixPartners' most significant findings is that pricing performance has become radically localized. What drives traffic in one market, or even one cluster of stores, may fail in a neighboring trade area.

This creates a fundamental problem for national chains that rely on uniform pricing and broad promotional campaigns. A $3 menu item that works in suburban markets with low labor costs and moderate real estate may destroy margins in high-cost urban locations. A breakfast bundle that draws traffic in commuter-heavy metros may underperform in college towns.

The implication is that operators must move away from one-size-fits-all pricing and build local pricing capabilities. AlixPartners calls for brands to "revisit their consumer understanding, who they are pricing for, what occasions they are serving, and what trade-offs customers are willing to make" at the local level. That requires data infrastructure most chains do not yet have.

The Bifurcation Winners

Not everyone is losing this game. Darden Restaurants reported Q1 calendar year 2026 results on March 20, with same-store sales up 4.2% and revenue of $3.35 billion, up 5.9% year over year. LongHorn Steakhouse, the standout, posted 7.2% same-store sales growth with positive traffic gains. Darden outpaced the broader industry by 540 basis points on comparable sales.

How? Not through discounting. Olive Garden introduced lighter-portion menu items under $15 that drew value-seeking guests while maintaining ticket averages. LongHorn leaned on food quality and operational consistency rather than price cuts. CFO Rajesh Vennam noted that the company had "given ourselves a lot of flexibility by underpricing inflation over several years," allowing it to take measured price increases without triggering guest count declines.

The contrast with QSR's $3-menu arms race is instructive. Darden's approach treats value as a function of experience, quality, and reasonable pricing, not as a race to the lowest possible menu item. That is precisely what the AlixPartners data suggests the industry needs: redefining value beyond the price tag.

What Operators Must Do Differently

The AlixPartners analysis points to three shifts operators need to make.

Build local pricing intelligence. National averages mask the reality that pricing effectiveness varies dramatically by market, daypart, and consumer segment. Operators who can identify local-level price points that move demand, and engineer menus to hit those points, will outperform those who rely on blanket promotions.

Stop treating promotions as strategy. Promotions drive short bursts of traffic that fade as quickly as they appear. The AlixPartners data on transaction values falling behind menu prices shows that promotional dilution is a real margin destroyer. Sustained value perception requires consistent execution across food quality, speed, and experience.

Segment the K-shaped consumer. The economy has split. Higher-income consumers are still spending, but they want quality and experience, not discounts. Lower-income consumers have pulled back and will continue to do so as gas prices eat into discretionary budgets. Trying to serve both segments with the same menu and pricing architecture will satisfy neither.

The Collision Course

The restaurant industry enters Q2 2026 facing a collision between two forces: consumers who are mathematically spending less, and an operating cost structure that makes low-price menus less profitable than they were a decade ago.

The National Restaurant Association projects the U.S. restaurant industry will reach $1.55 trillion in 2026, but with actual growth of just 1.3%, barely above stagnation. That top-line growth masks a profitability crisis where 42% of operators report being unprofitable, according to NRA survey data.

McDonald's McValue 2.0 and Taco Bell's Luxe Value Menu are rational responses to the consumer spending pullback. But the AlixPartners data suggests that price-only value strategies are addressing the symptom, not the disease. Transaction values are falling because consumers have lost confidence in the value proposition, not just the price point.

The operators who will win in 2026 are those who treat pricing as a precision instrument rather than a blunt weapon. The AlixPartners study across 90,000 locations makes one thing clear: the old playbook of raising prices, subsidizing promotions, and hoping traffic returns is producing diminishing results. The math has changed. The strategy must follow.

Sources: AlixPartners Proprietary Pricing Platform analysis (March 16, 2026), AlixPartners Global Consumer Outlook (13,000 consumers, 9 countries), The Wall Street Journal (March 11, 2026), Reuters (March 11, 2026), Restaurant Business (Jonathan Maze, March 19, 2026), Oxford Economics (Bernard Yaros and Michael Pearce, March 2026), Bank of America Institute (week ending March 14, 2026), McKinsey State of the U.S. Consumer 2026, Darden Restaurants Q1 CY2026 earnings (March 20, 2026), National Restaurant Association 2026 State of the Industry, AAA gas price data