What Does Value Mean in a K-Shaped Economy?
I’ve been observing the market and trying to reconcile two realities that seem to be happening at the same time.
On one side, oil and diesel prices remain high. Gas is expensive. Food, housing, insurance, and other everyday expenses continue to compress household budgets. I can feel it in my own finances, and I know I’m not alone.
On the other side, I continue to see new restaurants opening. I go to industry conferences and hear about companies expanding. When I look around, restaurants are still busy. People are still eating out. I still eat out—maybe not as frequently, but I haven’t stopped.
It makes me wonder whether we are in some kind of spending bubble.
I haven’t taken the time yet to study consumer credit usage over the past 12 to 18 months or how much of the continued spending is being supported by debt. But it would be interesting to understand how credit usage correlates with inflation and the declining purchasing power of the dollar.
Something is clearly happening beneath the surface.
I keep hearing the term “K-shaped economy.” Some consumers continue to do very well, while others are experiencing greater financial pressure. That divide raises an important question for the restaurant industry: Who continues to spend, who eventually pulls back, and which restaurant concepts will be positioned to survive that separation?
It also raises the question of what “value” really means.
I believe only the largest restaurant companies can afford to consistently chase the value customer if value is defined purely by price. Their scale gives them purchasing power, marketing reach, operational leverage, and the ability to accept thinner margins in ways that smaller concepts cannot.
For an independent restaurant, competing primarily on price can become a dangerous pursuit.
If you lower prices to attract a financially motivated customer, you have to recover that margin somewhere. One of the first places operators often look is labor. But when you cut labor, service suffers. Once service suffers, the experience becomes less valuable. Even though the product is cheaper, another group of customers begins to peel away.
That is how the pursuit of price alone can become a downward spiral.
The customer who chooses you only because you are the cheapest is also likely to leave as soon as someone else becomes cheaper. That customer may help create transactions, but they do not necessarily provide the foundation for long-term growth.
The customer I want to pursue is the holistic value buyer.
That customer does not ignore price. Price still matters. But it is only one part of the decision. They evaluate the product, service, atmosphere, hospitality, convenience, and how the experience makes them feel. They are asking whether the entire experience was worth what they paid—not simply whether it was the lowest possible price.
That is where I believe smaller concepts can compete.
If we provide a distinctive product, genuine hospitality, a thoughtful environment, and an experience that feels worth leaving home for, people will continue to gather. People will continue to celebrate. They may visit less frequently or become more discerning, but the desire for connection and shared experiences is not going away.
This is influencing how I think about growing our business.
It affects where we open, how quickly we expand, how we price the menu, how we invest in our people, and what we mean when we talk about value. Investing in people is not only a moral decision about how we treat our team members and guests. It is also a strategic decision because our people create a large part of the value customers experience.
This is a strange period to evaluate. I’m trying to find a comparable moment from my career in hospitality, but this feels different. We have inflation and pressure on the middle and working classes, while certain assets, companies, and sectors continue to command extraordinary valuations. AI is contributing to market optimism and investment, but underneath that excitement, ordinary consumers are still deciding whether they can afford dinner outside the home.
Perhaps the broader lesson is that growth and consumption never disappear evenly. The largest companies use scale to keep growing. Smaller companies have to rely on sharper strategy.
For independent restaurants, that means knowing exactly whom we serve and why they should choose us. We may not be able to win the race to the lowest price—and we probably should not try. But we can create an experience in which the product, service, hospitality, and atmosphere combine to make the customer feel that the money they spent was worthwhile.
In this economy, that may be the more durable definition of value.