With Americans watching their wallets, restaurants are feeling the pinch.

In its State of the Industry report for 2026, the main trade group for the nation’s restaurants and eateries is projecting sales will only grow moderately this year, rising 1.3%.

“It’s been a pretty challenging year for restaurants,” said Chad Moutray, chief economist for the National Restaurant Association. “We’ve seen costs rise pretty significantly for food, for labor costs, just a whole host of costs across the board.”

According to the report, 42% of restaurants surveyed nationwide said they were not profitable last year.

“Here in the D.C. area, obviously, we’ve had a lot of uncertainty with DOGE and government shutdowns and a lot of other kind of headwinds that have really hit the sector hard,” Moutray said.

Consumers are also thinking twice about eating out, as they face higher prices.

“At the same time, affordability is a big issue right now, and you have a situation where a lot of consumers are pushing back against price increases and really struggling to make ends meet,” Moutray said.

He said Americans are searching for comfort foods right now, like smashed burgers and protein.

“I think in times of uncertainty, people gravitate to soups and stews and burgers and meatloaf. I know I love those things,” Moutray said.

And with the popularity of weight loss drugs, he said Americans are seeking out healthier food options and cleaner recipes, and restaurants are learning to adapt.

“I think you are certainly seeing some restaurants that are leaning into protein, maybe leaning into smaller portion sizes, or appetizers and things along those lines,” Moutray said.