Labour Cost Becomes Main Sector Challenge

This article first appeared in Restaurant & Café. 

Restaurant365 has released its findings from its biannual industry survey. Restaurant leaders representing more than 5,000 locations shared 2025’s top challenges and opportunities alongside their priorities for the rest of the year, including labour costs, increased marketing and sales to drive revenue, training to improve guest experience and customer loyalty, and balancing cost controls with menu price increases.

Participants reported continued food and labour cost increases, with 89 percent experiencing rising staff expenses, well exceeding the 79 percent of last year’s survey who predicted labour cost increases. Eighty-two percent of those experiencing labour increases saw a one percent to five percent increase, while 15 percent experienced a 6 percent to 14 percent jump. Food cost increases also surpassed expectations, with 91 percent of respondents reporting a rise, up from the 82 percent 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 one percent to five percent increase.

In response to rising food costs, 56 percent of respondents said they planned to increase menu prices, down from 61 percent earlier in the year, and 18 percent said they doubled down on inventory and waste tracking, up two percentage points. The vast majority, 65 percent, of those businesses experiencing rising labour and recruiting cost challenges said their primary response has been operating below full capacity, while 19 percent 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. 78 percent of respondents said they expected to be impacted by tariffs, with 64 percent expecting a one percent to 10 percent increase in food cost prices due to global trade barriers.

At the same time, operators remain focused on the basics, with food costs, labour costs, and sales volume as the top three concerns for restaurants for the remainder of the year. Notably, 52 percent of respondents cite sales as their primary concern.

“The restaurant industry is clearly facing many challenges this year, but has also reached record-setting levels of sales and employment through their innovation,” said Restaurant365 CEO and Co-founder Tony Smith.

“We continue to invest in our platform to guide restaurants through this time so they can improve their margins alongside guests’ experiences.”

Read the full article at Restaurant & Café.