Also expected to feel the pinch are other casual-dining spots, such as Texas Roadhouse, Cheesecake Factory, Buffalo Wild Wings and Chili's.
Places doing well are so-called fast-casual joints, such as are Chipolte Mexican, Five Guys and Panera Bread. A Bank of America Merrill Lynch analysis says people are altering their dining preferences, opting for cheaper meals out.
"People want to trade down, they want to go to the lower-priced brands," says Tyler Vernon of Biltmore Capital Advisors.
On the bright side, restaurant hiring is growing, though slowly, and some food costs have dropped from a year ago.
KFC is also doing well. Zagat's 2011 fast food survey rated the company's fried chicken No. 1. And in China, KFC is popular for wedding receptions, Vernon says.
Olive Garden next week will start a "two for $25" promotion that offers unlimited soup or salad, two entrees and the choice of either an appetizer or dessert.
Applebee's and Chili's have been running "two for $20 promotions" for several years.
Reuters contributed to this report.