The ingredient changes in fast food are real, and they are not what is raising the price of a meal. Dyes are coming out and some fryers have switched fats. The menu board is being set by beef, labor and tariffs. We would underwrite a quick-service tenant on those three costs and treat the recipe changes as marketing.
What has changed in the recipe
On April 22, 2025, HHS and the FDA announced a plan to phase petroleum-based dyes out of the food supply by the end of 2027, with Red No. 3 due out by January 15, 2027. The FDA ties the effort to the administration's Make America Healthy Again initiative. The agency's pledge tracker, current as of October 16, 2026, lists one restaurant company: In-N-Out, which has removed certified colors from its strawberry shakes and pink lemonade. The rest of the list is food manufacturers.
In-N-Out's changes were to a shake and a lemonade. Neither touches the burger, the chicken or the fries.
The second change is frying fat. Restaurant Business reported that Steak n Shake began cooking its fries in beef tallow in February 2025, though the fries are still par-baked in vegetable oil by its suppliers, and that the chain has embraced the HHS-led MAHA movement. Biglari Holdings reported Steak n Shake same-store sales up 13.8% in the second quarter of 2026. We read that as a marketing result. The chain made noise about the change and drew customers.
The fat itself is not the pressure. USDA's Economic Research Service forecasts prices for fats and oils to decline in 2026.
What is moving the price
- Beef. USDA forecasts beef and veal prices up 9.4% in 2026. The National Restaurant Association says 2026 may mark the bottom of the cattle cycle, but slow herd rebuilding should keep prices elevated through at least 2027.
- Labor. The Association puts restaurant labor costs up 39% from pre-pandemic levels, and food costs up 34%.
- Tariffs. In the Association's 2026 report, 68% of operators said tariffs contributed to higher food and beverage costs. It also flags steel and aluminum tariffs as a source of higher packaging and equipment costs.
- Coffee and sugar. Coffee was up 7.1% year over year in September's CPI, as reported by 1851 Franchise. USDA forecasts sugar and sweets up 6.6% in 2026.
Eggs show these costs can move both ways. USDA forecasts egg prices down 29.4% this year as supply recovers from avian flu.
The total: USDA forecasts restaurant prices up 3.5% in 2026. In September, limited-service menu prices were up 3.2% from a year earlier while average hourly wages rose 3%, according to Restaurant Business data cited by 1851 Franchise.
What we take from it
A burger-heavy tenant carries the cattle cycle for at least another year. When we look at a pad for one, we want to see the operator's food and labor margin and how much rent it can hold, not just a higher sales number driven by price.
A chain that rebuilds its menu around an ingredient story can win traffic for a while. We watch for that in visit data, not in press releases. The ingredient list is changing at the edges. The cost of the core menu is not.
Sources
- Tracking Food Industry Pledges to Remove Petroleum-Based Food Dyes — U.S. Food and Drug Administration
- Food Price Outlook: Summary Findings — USDA Economic Research Service
- Rising food costs + tight supplies = more challenges for industry — National Restaurant Association
- Beef tallow and Bitcoin apparently helped Steak n Shake sales — Restaurant Business
- Biglari Holdings Inc. News Release (second quarter 2026) — Biglari Holdings via PR Newswire
- Menu Prices Outpace Grocery Inflation in September — 1851 Franchise
Written with AI assistance from published reporting, and reviewed against Falcon’s own market work. Commentary only — not investment advice.