Restaurant M&A in 2026: Distress, Discipline, and a Return to Opportunity

Insights from RFDC Las Vegas with Alan Gallup of National Franchise Sales

Alan Gallup represented National Franchise Sales at this year’s Restaurant Finance Monitor conference in Las Vegas (“RFDC”), where he joined a panel of leading financial advisors for “2026 M&A Forecast: Is the Restaurant Sector Ready to Reignite?” The discussion dug into the real dynamics shaping the restaurant sector today in how consumers are behaving, why value perception is tightening, and how the broader economic environment is influencing dealmaking across private equity, venture-backed concepts, and public companies.

When asked about the overall health of the franchisee base, Alan described the post-COVID landscape as “Darwinesque.” Operators with clear strategies, disciplined execution, and brand alignment have pulled ahead, while weaker performers continue to fall behind. With sales trends, margin performance, and unit-level metrics under more scrutiny than ever, every operator now needs a measurable story or vision behind their numbers to attract interest from lenders or buyers.

The panel also addressed the rise in franchisee struggles and bankruptcies. Alan noted that distressed operators tend to share the same underlying issues: reduced margins, ineffective brand leadership, and breakdowns in execution. These weaknesses not only push operators into restructuring but also directly impact on how valuations are approached in M&A scenarios. Buyers have become increasingly selective, and deals without a clear turnaround path are often discounted heavily or avoided altogether.

Another major shift discussed was the role franchisors are playing. For years, most of the pressure was carried by franchisees, but Alan pointed out that franchisors are now feeling the pain and stepping in more proactively. Support today ranges from remodel deferrals and temporary royalty relief to, in some cases, allowing store closures without penalty. These moves are becoming essential for stabilizing systems and protecting long-term brand value.

Looking ahead, the panel explored what needs to happen for M&A activity to accelerate. Compressed margins and increased risk have caused some investors to pull back, creating a real threat of lost interest. Still, returns in the 15–20% range remain compelling for buyers willing to take on calculated risk. For dealmaking to truly pick up, both brands and their regional performance need to show real promise, indicators that the story is improving, not deteriorating.

On valuations, Alan emphasized that confidence will be the determining factor for 2026. Confidence in the economy’s direction, confidence in leadership teams, and confidence in a brand’s ability to drive sustainable performance. Without that, valuations will remain cautious and highly segmented.

The conversation closed with what restaurant companies should be focusing on now. Alan encouraged brands, public and private alike, to prioritize ideation and execution today if they want to be well-positioned when the market fully opens up again. The brands that innovate now will be the ones investors view as most attractive when capital starts moving at a faster pace.

Asked for one prediction for restaurant M&A in 2026, Alan kept it direct: “The headlines will be about distress and success.” The divide between struggling systems and thriving ones is widening, and 2026 will only amplify that contrast.