(Zero Hedge)—Goldman analysts led by Christine Cho attended the Restaurant Finance & Development Conference (RFDC) in Las Vegas earlier this week. The conference drew restaurant executives and founders, franchisees and multi-unit operators, private-equity investors and lenders, industry consultants, and other stakeholders across the broader restaurant ecosystem.
Cho and her team met with many of these restaurant industry insiders and heard a very alarming and consistent message: the operating environment is deteriorating, especially among lower- and middle-income consumers, pushing brands to use discount campaigns to defend market share.
She said there was also increasing discussion around accelerating AI adoption, with operators betting on hybrid human-AI models to reduce costs and improve service.
Cho’s takeaways from RFDC are extensive and offer new color into the health of the restaurant industry and, by extension, the consumer. ZeroHedge Pro subscribers can find the complete list of takeaways in the usual place.
In this note, we’re focusing on just two of the takeaways. The first is the alarming shift among low- and middle-income consumers who are increasingly giving up on eating out and instead buying groceries and eating at home:
- Also noted was the drag on restaurant traffic by non-restaurants, particularly grocery and c-stores. A combination of data and surveys indicate growing evidence that consumers are leaving fast food and fast casual restaurants, replacing the meals with a combination of grocery (Aldi and Trader Joe’s specifically highlighted as taking share), fresh format grocery (for example, the hot food bar at Whole Foods), and c-store food (particularly with breakfast).
The second takeaway that caught our attention is the coming automation tidal wave that’s about to sweep through the restaurant industry:
- For the second year in a row, AI was front and center at the conference, with the focus split between current applications of AI and potential future developments across the restaurant space.
- Central to the discussion on current applications of AI was the focus on leveraging the technology to enhance the customer experience. Experts from both the restaurant industry and technology industry believe that it is not a case of robots fully replacing humans, but rather a hybrid approach by which humans leverage AI to drive efficiency gains and redirect their time and effort to other tasks that are more critical to the customer. From the perspective of a restaurant general manager, AI can help inform and expedite critical decisions around labor scheduling, inventory management, and food prep timing, and can also be leveraged to help train the workforce (seen as particularly critical given that it is a high turnover industry). Voice AI in the drive thru was also highlighted as a strong use case, with operators noting that is performing well in their tests.
Given these findings, let’s build on yesterday’s UBS note from analyst Jonathan Pingle, which highlights a tale of two consumer worlds…
And it gets worse.
Financial strains are building among low-income, millennial, and Gen-Z consumers, suggesting the Trump administration will likely push an affordability agenda into hyperdrive (read here) to prevent younger and lower-income voters from drifting toward the new unhinged Democratic Party that has been seized by Marxist DSA-ers, which will be dangling “free stuff” heading into next year’s midterm elections.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
Most young voters don’t want to think for themselves. They want government to tell them what to do and control their lives.