Running a restaurant has never been easy, but lately, it’s become a financial minefield. Owners across the country are watching their margins disappear, squeezed by two relentless forces: rising food prices and labor costs.

Here’s what’s going on—and why many restaurant owners are feeling the heat.

1. Food Prices Are All Over the Place

Supply chains are still recovering from the shocks of the pandemic, extreme weather events, and global instability. As a result, staple ingredients are fluctuating wildly in price.

• Beef, eggs, and dairy have seen some of the sharpest hikes, often due to droughts, disease outbreaks, or production bottlenecks.

• Imported goods—olive oil, spices, specialty cheeses—have become more expensive thanks to shipping delays and tariffs.

• Shortages and surpluses keep flipping the market. One month tomatoes are scarce and costly, the next they’re oversupplied and cheap.

Restaurant owners can’t just change their menus every week. So when ingredient costs spike, they either eat the cost or raise prices—risking customer backlash.

2. Labor Is More Expensive—And Harder to Find

Finding and keeping restaurant staff has become a serious challenge. Here’s why:

• Wages are rising. Many states and cities have increased minimum wage, and to stay competitive, restaurants are offering more just to attract applicants.

• Burnout is real. The industry is notorious for long hours and high stress. Since the pandemic, more workers are leaving food service altogether.

• Training costs add up. High turnover means constantly onboarding new employees, which drains time and money.

Even with higher pay and better benefits, some restaurants are still short-staffed. That forces owners and managers to fill in, leading to burnout at the top too.

3. Customers Notice the Difference

When restaurants raise prices, cut portion sizes, or reduce hours to cope, customers notice. Some are understanding, others walk away.

• Value-conscious diners are eating out less or turning to fast-casual options.

• Online reviews reflect everything—longer wait times, smaller portions, service issues—which can snowball into lost revenue.

It becomes a vicious cycle: higher costs lead to changes that upset customers, which leads to fewer sales, which tightens the budget even more.

4. What’s the Way Out?

Some restaurants are finding ways to adapt:

• Streamlining menus to reduce waste and improve efficiency.

• Partnering with local suppliers to cut transport costs.

• Cross-training staff to stay flexible.

• Investing in tech like self-order kiosks or kitchen automation.

But even with these tools, not every restaurant can absorb the shock. For small, independent spots—especially in high-rent areas—the margin for error is razor thin.

The Bottom Line
Food and labor are the two biggest costs in the restaurant business. Right now, both are climbing fast and showing no signs of slowing. Unless something changes—either in supply chains, labor markets, or customer expectations—more restaurant owners are going to find themselves in survival mode.

And for an industry built on passion and hustle, that’s a hard truth to swallow.