Soaring ingredient and labor costs, coupled with more cautious spending by low- and middle-income households, are eroding profitability across the U.S. restaurant sector. Federal data cited by industry executives show wholesale beef prices have climbed almost 21% over the past decade, while overall food costs are up a similar 21% compared with four years ago. With profit margins that often run only 3%–5%, independent operators and national chains alike are struggling to raise menu prices without deterring value-conscious diners. Wendy’s underscored the strain by lowering its full-year global sales outlook. The Dublin, Ohio–based burger chain now expects revenue to fall 3% to 5%, compared with earlier guidance of flat to a 2% decline, after second-quarter sales slipped 1.8% to $3.7 billion. Interim Chief Executive Officer Ken Cook told analysts that breakfast traffic has been especially weak as consumers opt to eat at home. Research firm Cowen responded by trimming its price target on Wendy’s shares to $11 from $13 and keeping a Hold rating. Larger rivals are trying to defend market share with promotions. McDonald’s, which had faced a similar drop-off among lower-income customers last year, said a renewed emphasis on value items such as its $2.99 Snack Wrap is drawing budget-minded consumers back. Still, industry analysts warn that if food inflation persists and wage pressures intensify, more chains could follow Wendy’s in dialing back growth expectations.