How operators are navigating the split economy.
I recently heard an analyst refer to our economy as moving from the K to the barbell economy: two growing extremes with a shrinking center. And it made me think about how operators are navigating these economic shifts. People are trading up, or they are trading down.
If you look only at topline economic numbers, things can appear steady. But that stability is an optical illusion. Behind the scenes, the way businesses are reaching those numbers has changed dramatically.
The uncomfortable truth is that businesses built for the middle are under the most pressure. Concepts that once thrived on being “something for everyone” are now the most vulnerable. Higher-income consumers continue spending on experiences and luxury while households in the middle, or have more uncertainty are pulling back sharply on discretionary spending.
We’re seeing this shift across industries. Art galleries report the disappearance of mid-range buyers. Automotive sales skew toward luxury vehicles or more economic used cars. Housing, retail, and entertainment show similar patterns.
Hospitality is operating inside this same reality. Many operators are seeing declining foot traffic paired with a rise in check averages that include buyouts, private events, and high-ticket experiences. Revenue lines may look stable, but the behavior behind them has fundamentally changed and that doesn’t exactly equate to a stable and healthy economy. And, the ability to forecast behaviors has never been more in flux.
That forces harder questions:
What does value actually mean for your guest today? And who is the guest you are trying to serve?
The customer you built your business around one or two years ago may now be in a very different financial place. The operators gaining momentum are intentionally redesigning how value shows up in their menus, spaces, and messaging.
How Operators Are Redefining Value
Across the industry, a pattern is emerging. The venues gaining traction are not trying to be everything to everyone. Instead, they are becoming more intentional about which side of the economy barbell they serve — and how they serve it.
Some are leaning into luxury and premium experiences. Others are doubling down on accessibility and affordability. And, some are building business models flexible enough to accommodate both. What they share is a willingness to rethink what “value” actually looks like in practice.
Creative Menu Engineering
One example I’ve seen is tiered dining experiences within a single restaurant. Rather than forcing every guest into the same price bracket – some operators are building layered menus that allow guests to self-select the level of spend that feels right.
One example is JC Holdway in Nashville – flexibility is built directly into the structure of the dining experience. Guests can choose an à la carte menu (range $9-$39), “Center Table” menu priced around $99 per person, or reserve the Chef’s Counter — a fully immersive, bespoke experience that can reach $3,000 for a group of six. A casual weeknight dinner, a celebratory meal, and a once-a-year splurge can now all happen within the same brand ecosystem.
This thinking is spreading beyond fine dining. Momofuku built an empire around flexible engagement: guests can grab a $15 bowl of ramen, spend $40–$75 on a casual dinner, or opt for premium tasting experiences ($180+) or buy their retail products at grocery stores, nation-wide.
Restaurants have obsessed over a single “average check.” Today, a better metric may be how many occasions a concept can meaningfully serve. Tiered menus allow operators to capture a a broader range of diners and special-occasion spenders without diluting identity. Flexibility can become a form of resilience.
Day to Night Transformations
Another strategy I’ve seen is a dual-concept model — spaces that shift identity throughout the day to serve different guests and occasions.
A couple of examples include: Anacacho, located inside the St. Anthony Hotel in San Antonio, the space functions as a coffee bar by day and a cantina by night. Kasama in Chicago (Filipino bakery by day, and exclusive high-end tasting experience at night)
These examples don’t represent a guaranteed formula for success, but they do signal a clear industry response: spaces are becoming more flexible, more layered, and more capable of serving different value expectations within the same brand.
Rise of Premium Experiences
While some operators are leaning into affordability and accessibility, others are designing experiences that feel rare, unique, and immersive, that justify a higher price point.
In Phoenix, Century Grand (Barter & Shake) has built an entire business model around immersive storytelling. Under one roof, guests can choose between three transportive environments — a tiki voyage, a Prohibition-era cocktail den in 1924 Chinatown NYC, or a vintage luxury train car.
That same theatrical approach appears at Carry On, a 1970s airline-themed cocktail bar where reservations function as boarding passes. Guests are welcomed by flight attendants in go-go boots, seats rumble during “takeoff,” and one can look out the flight windows to see passing clouds, birds while flying over landscapes. Each seating is structured as a timed “flight,” transforming a bar visit into a curated event.
And, Bitter & Twisted has expanded beyond its whimsical cocktail menus to offer memberships that include priority seating, discounted checks, special events, and exclusive perks. The bar has also introduced the “Bartender’s Table,” a limited, immersive experience that invites guests into the craft and theater of cocktail creation.
This trend extends well beyond cocktail culture. In Seattle, Archipelago offers a deeply personal Filipino tasting menu experience for just twelve guests at a time. In Chicago, El Ideas, the newest in molecular gastronomy, removes many traditional dining conventions altogether — encouraging guests to explore the kitchen, interact with the chefs, and participate in playful, theatrical courses which include everything from licking plates to milk courses in baby bottles. In San Francisco, Foreign Cinema pairs dining with film, blending culinary and cinematic storytelling into a single experience.
What connects these concepts is not cuisine or format, but intentional scarcity, storytelling, and emotional resonance that customers are willing to pay for.
Community, Accessibility, and High-Value Hospitality
While some operators are leaning into premium experiences, others are responding to the same economic pressures in a very different way: by doubling down on accessibility, community, and everyday gathering spaces.
In Los Angeles, Mercado La Paloma offers a powerful example of how hospitality can function as community infrastructure. The market hosts not one, but TWO Michelin star food restaurants – both are counter-service. Holbox, a Mexican seafood counter known for fresh, sustainable ingredients and a menu that ranges from affordable tostadas to special-occasion tasting menus. In the same market, Komal focuses on heirloom Mexican corn, offering masa by the pound, tortillas, and a menu of antojitos that center craft and tradition in an approachable format.
This model flips a familiar narrative. Rather than using markets and food halls as stepping stones to traditional brick-and-mortar restaurants, some chefs are intentionally choosing these formats as their long-term home — places where community, accessibility, and quality can coexist.
Chef Christian Hunter’s Hooligan, located inside Chicago’s Time Out Market, is a striking example of this reversal. The Michelin-starred chef (Atelier) chose a food hall setting for a concept described as a Midwestern seafood bar with a rebellious streak.
I wouldn’t be surprised to see even more food halls and markets pop up that accommodate more community-focused, authentic cuisines and experiences.
The “Third Place”
Sociologist Ray Oldenburg described “third places” as the spaces between home and work where people gather, linger, and feel a sense of belonging. For decades, bars and cafés have filled this role, but this is also shifting.
Today, we’re seeing a new wave of neighborhood bars that are blending craft quality with dive-bar accessibility. At Gilly’s House of Cocktails in San Diego – owned and operated by industry veteran Erick Castro (Polite Provisions, Raised by Wolves) drinks top out around $12 and happy hour starts at $4. The bar includes pool tables, weekly trivia and pizza & subs from the parlour next door. Sidewinder in Phoenix – owned by James Beard nominated chef TJ Culp – offers craft cocktails, beers, and comfort food (i.e sloppy joes, not-so-sonoran dogs and fries) in a tiny patio-centered space with the tagline “Open daily, closed rarely.” Elbow Room (semi-finalist for a James Beard award) in Vancouver describes itself as “a 1970’s dive bar with a fancy pants cocktail problem.”
These venues aren’t competing on spectacle. They compete on consistency, affordability, and belonging — without financial friction.
I’m also seeing major chains (many of which have been struggling in the casual dining space), win on values, affordable food and cultural relevance. Chili’s has emerged as one of the biggest restaurant comebacks in the past two years – posting more than 20% same-store sales growth across multiple quarters. The turnaround was driven by clear focus on value, simplified menus and aggressive social media driven marketing (the viral “cheese pull”)
Redefining Value Requires Clarity — and Courage
Taken together, these examples tell a clear story: hospitality is recalibrating. Guests are becoming more selective, and while there are many factors at play, the economy and people’s pocketbook are the number one drivers of behavior, and at the polarizing ends of the spectrum, we need to adapt. Spending is more intentional. And the definition of value is shifting. Some operators are responding with immersive, high-ticket experiences designed to justify premium spending. Others are building flexible concepts, layered menus, and community-driven spaces that prioritize accessibility and affordability. Many are experimenting, adapting, and learning as they go.
There is no single model to follow, nor do we know what the economy will look like in another year. But there is a common thread: the businesses finding momentum right now are the ones willing to rethink their value proposition with clear intention.
We don’t know exactly what the economy will look like a year from now. But there is little evidence pointing toward a dramatic behavioral reset. Income polarization, rising costs, and selective spending suggest continued pressure — and likely more closures — particularly for businesses that don’t adapt.
And, adapting requires courage – the courage to re-think value propositions, pricing, formats and long-held assumptions. In today’s economy, value is defined by alignment — between what a business offers and what a guest believes that experience is worth in their life right now.
The operators who recognize this shift — and adapt with clarity and courage — won’t just survive the barbell economy. They will define what hospitality becomes next.
Note from the Author: This article is based on industry observation, operator conversations, and publicly available market research. The goal is not to predict winners and losers, but to highlight emerging patterns and strategies that may help operators navigate a rapidly changing landscape.
I welcome feedback, examples, and conversation from operators and industry professionals who are seeing these shifts firsthand. If you’re experimenting with new models or seeing similar trends, I’d love to hear from you!
This piece is republished with permission from Kim Hassarud. For more of her thoughtful analysis on the evolving hospitality landscape, visit her Substack. You can access the original article here.
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