The State of Restaurants in 2025: Labor and Food Costs, and Getting Creative

This article first appeared in FSR.

The restaurant industry is no stranger to having a crisis on its plate. That’s the nature of day-to-day, in-the-trenches hospitality and navigating macro battles for the country’s second-largest employer. But 2024 had a unique tilt that felt like the apex of years of post-COVID reactions. Pent-up demand initially led to a strong run, but it was a stretch driven top line more by price than traffic. And, while customers understood the challenges and paid up for a return to experience, it was an equation that held only so long as menu prices soared amid inflation. Lingering economic uncertainty and a discerning customer led to further guest count declines and restaurants, despite costs remaining high and rising (like labor), had to question what the ceiling was, and find other ways to guard margins and still drive profit.

In plainer terms, restaurants grappled with hiking food and labor and the need to satisfy customers who had grown weary of price hikes.

That “delicate balancing act,” Restaurant365 said, needed to be struck while also staying afloat and delivering great experiences to a base of customers paying and expecting more.

The company tapped data from more than 6,200 restaurant and café locations ahead of the calendar turn. Here’s a look at some of the findings and what it says about the state of the restaurant industry going into 2025.

Read the full article in FSR.