2026 Grocery Industry Report: AI Adoption, Operator Priorities, and the Industry’s Biggest Challenges

4011 for bananas. 4048 for limes. 94225 for organic avocados.

For grocery operators, produce codes are second nature. They're busy managing inventory, forecasting demand, training staff, and keeping shelves stocked, all while delivering a great customer experience.

But as grocers look for ways to spend less time on manual tasks and more time running their businesses, they're increasingly turning to artificial intelligence to help.

To better understand how grocery businesses are approaching AI, and how they're navigating the broader challenges and opportunities facing the industry in 2026, Toast conducted a blind survey of U.S. grocery store decision-makers representing grocery businesses with 16 or fewer locations. Here's what we found.

How the grocery industry is using AI

AI experimentation is nearly universal. But how grocers engage with it and who they trust to guide them tells the real story.

Grocer sentiment toward AI is broadly positive and increasingly mainstream

Grocers are broadly receptive to AI and increasingly expect it to play a larger role in their businesses.

Comfort with AI remains especially high, with 93% of grocers saying they feel comfortable using it. Trust is also holding steady, with 92% agreeing that they trust AI with their business needs. Similarly, 93% believe AI will help them work more efficiently, and 94% say AI tools offer good value for the money.

Better decision-making tops the list of expected AI benefits for grocery operators

When grocers imagine what AI can do for their operations, better decisions come first. In the survey, 45% cited improving decision-making as a top expected outcome of AI. Other noteworthy outcomes include improving staff productivity (40%), improving marketing performance (40%), and improving inventory management and cost control (36%).

For those 36%, that help is already available. Toast Retail's AI invoice scanner lets operators scan a paper invoice and watch costs and quantities update automatically. Adding new items to the shelf takes seconds with SmartScan. And with Toast IQ, operators can ask plain-language questions about their inventory, costs, and margins and get answers instantly, without digging through reports.

Nine in ten grocery businesses are experimenting with AI

Over 9-in-10 grocers are already experimenting with AI in some form. But how they're doing it matters: 53% are experimenting exclusively through their technology vendors. And when asked who they'd trust most to guide their AI strategy, 38% pointed to a retail tech vendor they already use. Existing technology partners have a meaningful advantage when it comes to AI trust and guidance.

When asked how likely grocers are to use AI across different tasks, inventory/product ordering (76%), analytics (74%), and real-time insights (70%)  topped the charts.

For guest-facing tasks, especially phone automation, grocers are a bit more hesitant. And they most universally prefer a level of human oversight. This may indicate that while general AI trust is strong, autonomous trust is still building. Roughly 6-in-10 or more indicate that they’d need a layer of human review at a minimum to feel comfortable with agents completing tasks. 

That human-oversight preference plays out clearly when it comes to tasks grocers are most, and least, willing to hand over entirely. The data shows grocers are most comfortable letting AI own the full workload for people-and-process tasks: sourcing and hiring employees tops the list at 38% willing to let AI handle all of it, followed closely by COGS and profitability analysis (37%) and managing online orders or third-party delivery (35%). 

But comfort drops noticeably when the task touches money directly. Only 27% would let AI fully handle employee payroll, 24% for supplier and vendor management, and just 18% for spend management, including bill payment and vendor selection, the lowest of any category. 

The pattern suggests grocers may be drawing a quiet line between AI as an operational accelerator and AI as a financial decision-maker. 

Grocery operators want one integrated AI platform

Which vendors are grocers looking to help them achieve these tasks? Over half of grocers would prefer one platform that handles all their AI needs, and another 37% prefer a smaller number of integrated tools that work well together. Only 8% want separate point solutions. For grocers who land in that majority, Toast Retail is built around exactly that model, an all-in-one platform that connects every part of the store, from inventory and checkout to marketing and analytics.

Grocery industry financial performance in 2026: Revenue, profits, and expansion

Grocers are holding steady overall, but signals of caution are emerging beneath the surface.

Grocers are comfortable with the economy, but confidence in their own business has softened

Grocers are navigating the macro environment with a steady hand. About 81% describe themselves as comfortable or extremely comfortable with current market conditions, identical to 2025. Fewer than 10% are actively concerned.

However, the share of grocers describing their business health as "excellent" dropped 21 percentage points year-over-year, from 49% to 29%. The majority now say their business is in "good" shape. This still suggests a positive signal, but it’s a meaningful step down in confidence. Grocers aren't as bullish about their own trajectory as they were a year ago.

On the question of staying open, about 80% say they're very likely or probably will remain in business over the next 12 months, roughly on par with 2025. But the proportion saying "very likely" slipped from 47% to 37%, with more operators settling into the softer "probably." Stable, but maybe not quite thriving.

Grocery store profits and revenue are up, and expansion plans are holding steady

Here's the encouraging news: despite some softening confidence, the financials look strong. Among grocers who track their finances closely, 87% report profits have increased since last year, and 83% say revenue is up. Very few report declines.

Expansion plans reflect that underlying strength. 69% of grocers say they're somewhat or very likely to open a new location within the next 12 months, up 4 percentage points from 2025. Even as operators hedge against uncertainty, they're still playing offense.

Labor hiring is slowing, and more grocery operators are choosing to hold headcount than add staff

One area where caution is showing up clearly is staffing. Last year, 63% of grocers planned to increase headcount over the coming year. In 2026, that's fallen to 46% — a 17-point drop. Meanwhile, the share planning to keep staff levels the same jumped 21 points, from 32% to 53%.

This isn't necessarily a sign of distress. It may simply reflect leaner, more efficient operations. But it does suggest that more grocery teams will be expected to do more with the same number of people. That's a dynamic where AI tools are designed to reduce administrative burden. Think automated ordering, real-time analytics, and demand forecasting — move from nice-to-have to essential. 

Top challenges facing the grocery industry: Inflation, operations, and demand

Surface-level resilience masks real operational strain, and three pain points are rising to the top.

Inflation and operational pressure are the grocery industry's top pain points 

Ask grocers what keeps them up at night, and the answers cluster around a familiar set of pressures. About 1-in-5 cite inflation in their top three challenges, with inventory management (19%), inflationary pressure (18%), and marketing (17%) all near the top.

Two other challenges stand out because they're areas where technology can make an immediate impact: employee scheduling (18%) and increasing line speed (17%). Neither ranked among operators' top five concerns last year, suggesting these pain points are becoming more pressing. Long checkout lines frustrate customers, while scheduling can consume hours of manager time each week. Both are operational pain points that directly affect efficiency, staff productivity, and the customer experience.

Toast Retail is built to keep lines moving with high-speed barcode scanning, integrated scale support for by-weight items, and smooth SNAP/EBT processing. These features can reduce friction at checkout, helping cashiers move faster and customers get through the line with less waiting.

Nearly three-quarters of grocery businesses find generating customer demand at least somewhat challenging

Keeping the shelves stocked is one thing. Getting customers through the door is another. When asked how challenging it is to generate demand, 73% of grocers said it's at least slightly challenging. 

For an industry that often competes on convenience, price, and familiarity, demand generation is an increasingly active discipline. Reaching the right customers with the right promotions and doing it efficiently is a growing part of the job.

Toast Retail is designed for repeat visits. Reward regulars, run targeted promotions, and track what’s working — all with one marketing tool.

Grocery industry operator priorities for 2026 

Goals data shows grocers optimizing for resilience: profitability, efficiency, and new revenue streams are the priorities.

Profitability is the top grocery business goal in 2026, followed by simpler operations and revenue diversification

Grocery operators head into the next 12 months with a clear hierarchy of goals. Improving profitability leads at 31%, followed closely by simplifying operations at 30% and increasing same-store revenue at 27%.

One goal in particular stands out for its year-over-year movement.  "Increase the number of ways I generate revenue from customers" — think e-commerce, catering, and other ancillary channels — jumped 9 points to 22%. Diversified revenue is a buffer against uncertainty, and grocers appear to be actively building one.

What the data means for grocery operators in 2026

The 2026 Grocery Industry Survey paints a picture of an industry in confident, if cautious, motion. Profits are up, expansion is on the table, and AI adoption is accelerating. But beneath that resilience, operators are managing real pressure: inflation, tighter labor strategies, and the ongoing challenge of driving customer demand.

Based on these findings, grocers may be better positioned for the year ahead if they find ways to do more with less. Integrated technology can help shoulder more of the operational load, freeing teams to focus on decisions that require a human touch.

Toast Retail: A POS built for the challenges grocers face in 2026

Grocery operators are telling us they want AI that's embedded in their existing tools, integrated across functions, and backed by a vendor they already trust. That's exactly what Toast Retail is built to deliver.

Designed for the realities of modern grocery, Toast is built to help lean teams simplify day-to-day operations so they can focus on the decisions that matter most. Whether it's checking sales by department, monitoring labor costs, or spotting inventory issues on the go, the Toast Now app gives operators real-time visibility into their business from anywhere. And with Toast IQ, grocers can surface insights and take action within the platform (no tab-switching required).

After all, you've got enough items to stock. Your AI shouldn't be one of them.

Methodology

Toast conducted a blind survey from 4/3/2026-4/20/2026 of N(eff)=127 U.S.-based SMB (16 or fewer locations) grocery store decision makers. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to respondents for participation. Weighting was applied based on POS tech use to achieve the expected distribution, which may increase variability. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error is approximately +/- 9% for the grocery operator subgroup.

Grocery industry FAQs

How much does a grocery store POS system cost?

The upfront costs for Toast are hardware and implementation*, which vary depending on your specific hardware packages and installation needs. We have flexible payment options available, including payment as a percentage of your sales** or a fixed monthly payment using our third-party financing partner. These solutions are not just for Retailers with great credit; they have no interest or fees, and our Easy Pay option has a 100% approval rate and no credit check.

Within our Starter Kit, we also offer the Pay-as-you-Go plan that reduces your upfront hardware and installation costs through an all-in-one platform rate.

Does Toast work as a grocery store POS system?

Yes, Toast is a POS system built for the full complexity of running a grocery store. It supports high SKU counts, by-weight pricing, EBT/SNAP payments, department-level inventory tracking, and vendor invoice management, all from one platform.

Can a grocery store POS accept EBT and SNAP payments?

Yes, Toast supports EBT and SNAP payment processing directly at the point of sale, no separate terminal needed. Toast can identify eligible items and separate them at checkout, so your line keeps moving without manual intervention from your cashiers.

How does a grocery store POS handle weighted items?

Toast supports integrated scale functionality for produce, deli, meat, bakery, and bulk departments. The POS pulls weight directly from a connected scale and calculates the price, reducing manual entry and pricing errors at checkout. Toast can also scan barcode labels produced by any scale vendor that follows the GS1 spec for variable measure items.

Can I use the same POS for my grocery store and my deli or food service?

Yes, Toast lets you run your grocery floor and your deli, bakery, or prepared foods counter from the same platform — no separate terminals needed. Customers can check out anywhere, no matter what they're purchasing, and food counter orders route directly to a kitchen display system. So you can manage your whole store in one place, without switching between systems.

*Pay-as-you-Go pricing applies to new customers and single locations only. Plan is subject to a Platform Fee which is applied to each transaction and begins when customers start transacting. Plan is subject to a 2 year agreement.


**Includes installation, shipping, handling, and taxes