Food & Beverage took a step back in the third quarter, but most of the sector remains higher than a year ago. The quarter's declines followed a clear pattern: where consumers eat. With restaurant prices rising faster than grocery prices, the segments tied to dining out saw the sharpest declines. Grocery retail, beverage and commodities remain ahead of where they stood a year ago.
Public-market valuations declined, but deal activity rebounded from a slow second quarter. Buyers continued to pay for established brands, growth categories and entry into new markets.
The quarter's sharpest declines came where consumers eat out. Restaurants fell 8.8% quarter over quarter and ended September at its lowest point of the year. Menu prices appear to be part of the reason. Prices for food away from home rose 3.5% over the year to September, compared with 1.8% for groceries, according to the Bureau of Labor Statistics.1 In a September survey by the National Restaurant Association, the industry's trade group, 39% of consumers said they spent less at restaurants than in the second quarter.2
Food Distribution, which supplies restaurants, fell 7.7% in the quarter but remains slightly above a year ago. Nearly half of surveyed consumers said they had increased grocery spending.2 Retailers, the segment of large grocers and warehouse clubs, eased 4.7% in the quarter and remains 5.5% above a year ago.
Grocery spending did not lift every brand. Branded Foods finished at its low for the year, down 11.9% year over year. Store brands reached a record 23.8% of U.S. grocery units in the first half of 2026, while national brand units fell, according to market research firm Circana.3 General Mills lost volume despite lowering prices across much of its portfolio, and Conagra's volume also declined.4
Agricultural Products & Commodities led the sector. The segment edged up 1.4% in the quarter and finished 17.2% above a year ago. The Environmental Protection Agency (EPA) finalized record biomass-based diesel requirements for 2026 and 2027, which are expected to raise demand for soybean oil.5 ADM6 and Bunge7, a global grain trader and oilseed processor, both raised their 2026 earnings outlooks on stronger processing results. Beverage also remains 15.1% above a year ago.
Every segment's EV/EBITDA multiple slipped in the quarter, though most moved sideways across the year. Restaurants is the exception. Its multiple fell to 13.2x from 15.9x a year ago, its lowest point on the chart. Agricultural Products & Commodities moved the other way, rising to 8.8x from 7.2x a year ago. Valuations, like returns, favored commodities over dining out.
The Dinan Food & Beverage Index† fell 5.7% quarter over quarter, a steeper drop than four of the six segment indices. Over five years, the index is up 29.2%, compared with 72.9% for the S&P 500. For middle-market owners, the public benchmark for companies like theirs pulled back modestly and remains well above its 2022 lows.
The index's EV/EBITDA multiple eased to 13.9x from 14.7x, close to the 14x level where it has spent most of the past five years. Among the segments, only Beverage and Retailers trade higher. The S&P 500 multiple held near its high at 18.2x. The valuation benchmark for middle-market food companies held steady even as their share prices fell.
Private-market signals were firmer. Buyers kept bidding for established brands in Branded Foods, where public valuations were weakest. That suggests buyers are valuing individual brands rather than the segment's public pricing.
Food & Beverage M&A recorded 81 transactions in the third quarter, up from 63 in the second quarter and modestly below the 88 recorded a year earlier. The rebound suggests buyer appetite recovered from a slow spring, though volume has not returned to its 2024 pace. Borrowing costs rose late in the quarter, when the Federal Reserve raised its benchmark rate by a quarter point.8
The quarter's deals show buyers paying for established brands, growth categories and new markets. In the largest, Intersnack, a family-owned European snack maker, agreed to take Pennsylvania snack maker Utz Brands private for $2.9 billion. Intersnack said the deal gives it entry to the U.S. snacking market.9
Private equity also bought established brands. Hain Celestial, a natural and organic food company, agreed to sell most of its international business to private equity firm AURELIUS for $323 million. Hain said the sale will reduce debt and focus the company on North America.10 In a growth category, Italian confectioner Ferrero agreed to acquire Purely Elizabeth, a Colorado granola and oatmeal brand whose sales doubled in two years. Ferrero said the brand strengthens its better-for-you breakfast portfolio in the U.S.11
The coming quarters will show whether restaurant price increases moderate enough to bring diners back. Higher rates add a hurdle for leveraged buyers, who already found mid-sized deals hard to finance.12 Still, well-positioned brands continue to draw both strategic and private equity buyers.
† The Dinan Food & Beverage Index is a proprietary index of publicly traded middle-market Food & Beverage companies maintained by Dinan Capital Advisors. Index composition is available upon request.
1 U.S. Bureau of Labor Statistics. "Consumer Price Index News Release, September 2026." October 14, 2026. https://www.bls.gov/news.release/cpi.htm
2 National Restaurant Association. "Affordability Pressures Mount, but Consumers Continue to Prioritize Restaurants." September 17, 2026. https://www.restaurant.org/research-and-media/research/restaurant-economic-insights/analysis-commentary/affordability-pressures-mount,-but-consumers-continue-to-prioritize-restaurants
3 FoodNavigator-USA. "Nearly a Quarter of All US Grocery Units Sold Are Now Private Label." July 9, 2026. https://www.foodnavigator.com/Article/2026/07/09/private-label-widens-lead-over-national-brands-in-2026-grocery-unit-sales/
4 Food Industry Executive. "General Mills Repriced Two-Thirds of Its Portfolio and Still Lost Volume." August 2026. https://foodindustryexecutive.com/2026/08/general-mills-repriced-two-thirds-of-its-portfolio-and-still-lost-volume-heres-whats-really-growing-units/
5 American Farm Bureau Federation. "EPA Sets Record Renewable Fuel Volumes for 2026-2027." May 5, 2026. https://www.fb.org/market-intel/epa-sets-record-renewable-fuel-volumes-for-2026-2027
6 ADM. "ADM Reports Second Quarter 2026 Results." August 4, 2026. https://investors.adm.com/news/news-details/2026/ADM-Reports-Second-Quarter-2026-Results/default.aspx
7 Bunge Global SA. "Second Quarter 2026 Results" (Form 8-K, Exhibit 99.1). July 29, 2026. https://www.sec.gov/Archives/edgar/data/0001996862/000162828026050334/epr06302026.htm
8 Board of Governors of the Federal Reserve System. "Federal Reserve Issues FOMC Statement." September 16, 2026. https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm
9 Utz Brands, Inc. "Intersnack Group to Acquire Utz Brands" (Form 8-K, Exhibit 99.1). July 21, 2026. https://www.sec.gov/Archives/edgar/data/0001739566/000119312526309592/d157266dex991.htm
10 Food Business News. "Hain Celestial to Sell International Business." September 15, 2026. https://www.foodbusinessnews.net/articles/31003-hain-celestial-to-sell-international-business
11 Prepared Foods. "Ferrero to Acquire Purely Elizabeth." August 17, 2026. https://www.preparedfoods.com/articles/131827-ferrero-to-acquire-purely-elizabeth
12 PwC. "Consumer Packaged Goods and Retail: US Deals 2026 Midyear Outlook." June 17, 2026. https://www.pwc.com/us/en/industries/consumer-markets/library/consumer-deals-outlook.html