Operations

Report reveals increased focus on food, labor cost controls

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July 16, 2025

Restaurant leaders are reporting continued food and labor cost increases, with 89% experiencing rising staff expenses, according to a Restaurant365 study.

The figure exceeds the 79% who predicted labor cost increases in the prior year's study, according to a press release on the findings.

The restaurant management platform's "Midyear State of the Restaurant Industry" study also revealed 82% of those experiencing labor increases saw a 1% to 5% increase, while 15% experienced a 6% to 14% jump.

Food cost increases also surpassed expectations, with 91% of respondents reporting a rise, up from the 82% who had expected increases at the start of the year. More than half of those coping with food cost inflation this year are seeing a 1% to 5% increase.

In response to rising food costs, 56% planned to increase menu prices, down from 61% earlier in the year, and 18% doubled down on inventory and waste tracking, up two percentage points.

The vast majority, 65%, of those businesses experiencing rising labor and recruiting cost challenges said their primary response has been operating below full capacity, while 19% said they limited operating hours to manage the shortage and increased cost.

Restaurant leaders anticipate continued challenges this year, particularly with the looming threat of tariffs hanging over the global economy. The report also revealed 78% expected to be impacted by tariffs, with 64% expecting a 1% to 10% increase in food cost prices due to global trade barriers.

"The restaurant industry is clearly facing many challenges this year, but has also reached record-setting levels of sales and employment through their innovation," Tony Smith, Restaurant365 CEO and co-founder, said in the release. "We continue to invest in our platform to guide restaurants through this time so they can improve their margins alongside guests' experiences."

More than 40% of operators plan to increase budgets for promos and marketing, especially for off-premise dining. An additional 35% of respondents reported seeing more takeout and delivery orders than in previous years, which correlates with 33% of participants reporting a decrease in dine-in visits.

More than half, 58%, of respondents don't plan to open any additional locations this year, meaning all additional revenue must come from existing locations. Of those looking to expand, 19% of participants said they're planning one additional location, and 20% said they're working on opening two to five more locations before the end of the year.