Investor activism shifts to optimization in restaurants and retail

Billy Roberts

April 8, 2026

Key Points

• Higher prices and consumer caution are taking a toll on restaurant foot traffic and retail basket size.
• Activist investors are targeting areas within their portfolios that can boost performance, trim margins and improve consumer engagement.
• Higher gas and household costs will likely keep much of consumers’ food spending on options at home.

Activist investors have taken an increasingly prominent role in shaping corporate behaviors in both restaurant and retail environments. Usually citing slowing traffic and sales volumes, these investors are pressing management teams to offset price-sensitive demand and to protect margins.

In packaged food and beverage, activists have focused on structural efficiency and simplification by reducing overhead, SKUs and brands through divestitures. Lamb Weston investor Starboard cites margins and overall competitiveness behind its goal to accelerate operational improvements and expand its cost-savings targets. Starboard anticipates “manufacturing/operations discipline” could deliver cost savings of $500 million. This follows a similar effort by Jana Partners, which settled with Lamb Weston to add board representation and to implement operational changes.

Elliott Investment Management pushed for considerable cost cuts at PepsiCo, in addition to a 20% reduction in its U.S. product lineup. PepsiCo also will shutter three manufacturing plants and several lines, while offering more affordable price options that aim to improve “the purchase frequency of our mainstream brands.” Elliott also encouraged innovation in areas around non-artificial ingredients and macro-nutrients protein, fiber and whole grains. Since the announcement, PepsiCo has adjusted its FY26 growth targets to 2%-4%, with management expecting the higher end of that range in the second half of the year.

Elliott took a similarly active position with J.M. Smucker, leading to a 25% SKU reduction in the company’s sweet baked snack portfolio. In the process, Smucker added a pair of new board members. An Elliott partner said the appointments “represent critical steps toward ensuring The J.M. Smucker Company reaches its full potential.”

These and similar efforts come as consumers adjust to higher prices and only moderate wage growth, shifting spending away from dining out and toward more at-home meals. The restaurant sector has seen considerable investor activism, most often encouraging closures or divestitures. Denny’s closed underperforming locations at the behest of JCP Investment Management, shuttering 10 stores in the second quarter as same-store sales dropped 1.3%. Galloway Capital Partners plans for Noodles & Co. to sell 200 of its existing 349 company-owned stores to generate about $60 million and retire much of its “high-cost debt.”

Restaurant chains continue to attempt to build foot traffic through value promotions. For instance, McDonald’s has announced a $3-and-less value menu to lure cost-conscious consumers. Yet such measures also severely impact margins. The National Restaurant Association’s State of the Industry report found that 42% of all restaurant operators were not profitable in 2025; 60% said their business conditions had deteriorated since 2024. Winning back those consumers, however, will prove even more challenging as prices for gas and other expenses increase. Technomic research reports 9 in 10 consumers are feeling the impact of rising gas prices and responding by spending less on goods and services overall. Technomic estimates that every 50-cent increase in gas reduces consumer spending by $68 billion.