"The biggest issue is one customers have also noticed the most: inflation. The cost of food and labor are the two biggest expenses for a restaurant, representing an average of about 66% of total business costs. Since 2020, supply chain disruptions have increased the cost of food by about 24%, meanwhile a shortage of labor has driven up wages for workers by a similar amount."
"Although labor and food are the biggest expenses, lots of other costs are skyrocketing. Rent is a major part of restaurant pricing, yet rising costs for rent across the country have left many independent restaurants struggling. When you combine all those cost increases over the last five years, menu pricing has had to jump 30% for many businesses to simply break even."
A wave of large restaurant bankruptcies and local closures has emerged, with restaurants declaring bankruptcy 50% more in 2024. Multiple cost pressures over the last five years have increased volatility in the industry. Food costs rose about 24% since 2020 because of supply chain disruptions, while labor shortages pushed wages up by a similar amount. Food and labor together represent roughly 66% of average business costs. Rising rent and other expenses forced many businesses to raise menu prices about 30% to break even, while inflation-weary customers resist higher prices and squeeze demand.
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