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Food retail companies and private equity investors show signs of a cooling appetite for new deals in the sector, but those who look to M&A to address targeted needs can find opportunities to streamline and modernize even in an uncertain market.
Executives across industries are seeing a growing need to transform due to disruptive pressures, such as higher costs, changing consumer preferences, heightened regulatory scrutiny and the accelerating impacts of widespread AI adoption. For food retail companies looking to reinvent themselves through M&A, uncertainty is also reshaping the kinds of deals they are seeking. While some may be tempted to see deals as a risky path in today’s environment, many food retailers stand to benefit from five M&A approaches that are working for sector peers:
The evidence is clear in data that shows that food retail M&A activity – grocery, food service and quick-service restaurants (QSR) – has declined as companies have turned from primarily growth-based and consolidation deals toward more strategically targeted transactions. Across the sector, deal volumes are down 13% from historical averages, and the number of deals over $1 billion has dropped by half since 2022, a sign that company leaders are being more cautious and strategic about where they invest. In another sign of a changing environment, private equity investors have pulled back from food retail, with deals falling 37% between 2022 and 2024.
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Read moreThe overall M&A market appears to be heading for a strong 2026, and many companies in food retail have a backlog of strategic needs in AI, data analytics, infrastructure and productivity improvements. Companies that may have overemphasized diversification and expansion in recent years stand to benefit from a diet of divesting low-performing assets and redirecting resources to more capital efficient investments.
For food retail, the next wave will likely consist of fewer, more strategic transactions, focused on building resilience, unlocking supply-chain efficiencies, expanding private label offerings and monetizing data through retail media.
Retailers continue to modernize their capabilities to improve customer targeting and influence consumer behavior through retail media networks (RMNs). RMNs use first-party data to increase effectiveness and measurement of intent-rich marketing for both physical and digital channels. In recent years, precision marketing RMNs for the country’s largest grocers, such as Kroger Precision Marketing and Albertsons Media Collective, have played crucial roles in building out their respective capabilities.
Yet while there are clear benefits to investing in modernization, a sudden switch in focus for companies unaccustomed to managing innovation creates new challenges and risks for C-suite executives and M&A leaders who normally view food retail M&A through a lens of growth.
Against this backdrop, it is important for leadership teams to understand the drivers of selective M&A activity.
Based on experience with clients and supported by a study of 10 years of industry transactions and macroeconomic trends, we have identified five competitive themes and strategic approaches that food retailers can emulate for success.
Retailers are doubling down on their core strengths, increasingly viewing portfolio complexity and its associated costs as a margin killer. By divesting non-core assets, retailers are freeing capital for reinvestment in high-impact areas. In the past five years, food retail organizations have done over 180 deals focused on pruning non-core assets. For example, Kroger’s exit from its specialty pharmacy business signalled a clear intent to streamline operations and focus on core business areas.
Large corporate retailers continue to develop technology capabilities as a key foundation of their competitive advantage. More recently, deals that bring AI-driven pricing, automated fulfilment and media capabilities are helping define the next wave of customer offerings. Since 2020, the food retail market has conducted around 100 deals focused on building AI and digital capabilities.
Supply chain disruption and tariff shocks have increased the need for greater agility and resilience for retailers. In this environment, companies are turning to vertical integration to reduce dependency on external suppliers and improve cost controls. From 2022-2024, the food retail sector executed over 20 vertical integration deals, most of which centered on upgrading distribution and fulfilment capabilities. For example, C&S Wholesale Grocers’ acquisition of SpartanNash expanded its distribution network to 60 facilities, strengthening resilience and service reach.
Physical retailers lead in deal volume, while distributors and online players post the fastest growth as investment shifts to digital and supply-chain innovation.
While megadeals are down, retailers are looking for other ways to strengthen their core businesses, particularly focusing on high-growth, specialty acquisitions. The health and wellness market, valued at $250 billion in 2025, is expected to grow over 9% annually through 2030. Since 2020, there have been 50 transactions in health and wellness, especially brands that focus on organic, functional and clean-label products, positioning retailers to meet surging customer demand.
Leaders take note: Restaurant and convenience store convergence is accelerating as convenience chains buy foodservice brands to boost traffic, loyalty and margins — signaling a future where fuel, food and fast service blend into one seamless ecosystem.
Finally, size still matters — but only when it delivers synergies and operational efficiency. Regional consolidation and franchise acquisitions remain attractive plays for creating economies of scale, and retailers should continue to be on the lookout for strategic plays that help achieve this, particularly within core offerings. The food retail industry has sustained high deal momentum, with more than 500 deals since 2022 (for example, Restaurant Brands International’s acquisition of Carrols Restaurant Group to consolidate its ownership, expand market reach and strengthen its presence).
Food retailers entering the next phase of M&A will need to prioritize strategic focus over scope expansion, investing in capabilities that strengthen resilience and long-term competitiveness. As disruptive forces reshape consumer behavior, regulation and operational models, companies that streamline portfolios, modernize by adopting AI and pursue high-impact opportunities will be best positioned to lead. By approaching deals with precision and purpose, industry leaders can unlock meaningful value while adapting to a rapidly evolving market.
Food retailers are rethinking dealmaking as market uncertainty and shifting conditions reshape priorities. Instead of pursuing scale alone, companies are focusing on targeted investments that strengthen core operations and build future-ready capabilities. This includes refining portfolios, adopting advanced technologies, improving supply chains and tapping into faster-growing niches. Strategic, well-defined transactions are emerging to enhance efficiency, resilience and customer relevance. Organizations that take a disciplined approach to capital allocation and capability building are better positioned to navigate disruption and sustain long-term value creation in a rapidly evolving landscape.
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