Last year couldn’t have been much worse for the full-service sector. Some of the country’s biggest and most venerable chains declared bankruptcy and closed units, including Red Lobster, TGI Fridays and, early this year, Hooters of America.
As my colleague Joe Guszkowski has noted, the sector shed locations last year, thanks largely to those filings and various struggles.
It continued a long-term trend. Since I started covering this industry nearly 20 years ago, the casual-dining sector has been in some form of crisis. The chains have been shedding traffic, even as new concepts emerged and built new locations.
It’s amazing how things can change.
On Wednesday, Chili’s reported 24% same-store sales growth. On a two-year basis, that key metric is up 39%. That is on par with the insane level reported last year by the chicken wing chain Wingstop in 2024. In a string of unbelievable sales results from the chain, that one is maybe the most impressive.
Everybody's avoiding fast food and just heading to Chili's apparently.
— Jonathan Maze (@jonathanmaze) August 13, 2025
But it isn’t just Chili’s. Applebee’s same-store sales rose nearly 5% in the second quarter, thanks to an improved 2-for-$25 promotion. BJ’s Restaurants same-store sales rose 2.9%, with improving profits. Sales rose 6.9% at Olive Garden. Another stalwart, Texas Roadhouse, reported same-store sales up 5.8%.
On the private side, there are strong indications that Red Lobster is surging this year behind the success of its CEO-led marketing and seafood boils.
One key exception: Red Robin, which had some momentum early in the year but saw sales decline more recently. There are always exceptions. Like Taco Bell in the fast-food space and Potbelly in fast-casual.
The performance is particularly notable because it comes in the backdrop of a difficult overall industry environment that is supposed to create problems for casual-dining brands. Both quick-service chains and fast-casual chains are reporting a string of weak sales results, leading to corporate layoffs, CEO merry-go-rounds and investor uprisings.
Publicly traded casual-dining chains outperformed quick-service brands in the first quarter for the first time in recent memory, outside the pandemic recovery period. They are likely to outperform fast-casual brands in the second quarter. If you would have told me that a year ago I would have laughed at the ridiculousness of that joke.
Casual-dining is not supposed to be doing this, not in an environment in which consumers are cutting back on spending.
And, by the way, if you think this cutback is just limited to low-income diners you’re not paying enough attention to the results of chains like Cava and Sweetgreen, neither of which are exactly flush with low-income diners. Consumer confidence took a hit and there are more job concerns than there have been in five years.
Consumers in environments like this are supposed to “trade down,” or shift spending from casual dining to fast casual or to fast food, because those options are cheaper. But consumers no longer think they’re the cheaper options.
Consumers are managing their spending. They are reducing their visits or buying less expensive items or, frequently, skipping breakfast. But they are visiting when the urge hits them, and they’re getting what they want when they do go. So they’ll flock to McDonald’s for Minecraft merch or to Wendy’s to get some version of a Krabby Patty.
But after social media fueled consumer anger over prices, many consumers realized they could visit one of these casual dining chains and get even more for their money, a lesson Chili’s taught the world last year. And after a few years in which chains closed locations or shut down altogether, there is less competition for those diners.
How long will this last? That’s hard to tell. And as Red Robin demonstrated, a little momentum can go away quickly. But casual-dining chains have their best opportunity to take share in the restaurant business than they’ve had in a long time.