Restaurant operators are increasing prices, changing vendors, tracking inventory, and streamlining menus to manage costs.
This article first appeared in Pizza Today.
After years of difficulty retaining employees, U.S. restaurants are starting to see positive changes, according to a study released Tuesday by restaurant software firm Restaurant365. The California-based company gathered input from 5,000 U.S. restaurants to learn how they are coping with competing goals of growth and navigating inflation.
Since the start of the year, 9 percent more restaurants are reporting staff turnover of 10 percent or lower, according to the R365 survey, and nearly 79 percent of restaurants cite turnover rates below 25 percent. Joe Hannon, general manager of inventory and sales at R365, credits increased use of performance-based incentives and training programs as part of that positive change. “Building more clear career paths” encourages top employees to stick around, he tells Pizza Today. Meanwhile, more companies are offering customizable courses that permit staff members to build the skills they find most interesting.
Hannon reports many restaurant operators are re-evaluating their management structures this year while adding lower-paid positions such as tablet runners to offset labor expenses. To further target labor costs, operators increasingly are using scheduling tools that align with sales data to improve efficiency while ensuring coverage during peak times.
Not surprisingly, food and labor costs are the top concerns for restaurant operators in mid-2025.
Increased Labor Costs: According to R365’s midyear report, 89 percent of survey respondents are experiencing increased labor costs in 2025 – an 11 percent increase from earlier in the year – with the greatest share (61.72 percent) reporting increases of 1-5 percent.
Increased Food Costs: Meanwhile, 91 percent of those surveyed report increased food costs, with 50.47 percent citing increases of 1-5 percent.
“Throughout the years, food costs and staff retention have continued to be among the largest challenges facing restaurants – with retention oftentimes taking the top slot,” Hannon says. “Sales volume has been a recurring concern as well.”
While the challenges facing restaurants are relatively consistent, operators are embracing a variety of tactics to help deal with ongoing inflation and associated challenges. For example, R365 reports restaurants are taking the following actions to get a handle of budgets:
55.75%: Menu price increases
19.82%: Supplier and vendor changes
19.97%: More frequent inventory and waste tracking
6.45%: Smaller/limited menu
While increasing the price of menu items is the most-cited way restaurateurs are dealing with inflation, Hannon says the number of operators looking to make up budget shortfalls through price increases is down significantly from just a few years ago. “This number has been consistently decreasing from previous years. … In 2022, 93 percent of respondents raised prices,” he tells Pizza Today.
Read more at Pizza Today.
Read More:
See why more than 40,000 restaurants use Restaurant365
See why more than 40,000 restaurants use Restaurant365
500 Technology Drive, Suite 200
Irvine, CA 92618
Westech 360
8911 N Capital of Texas Hwy
Building 1, Suite 1200
Austin, TX 78759
Restaurant365 bridges the gap between accounting and operations by centralizing all data, helping restaurant operators to become more efficient, accurately forecast, and tackle any challenge or opportunity with speed and accuracy.
