Survey: Restaurants continue to adjust to industry challenges, cost pressures
Food inflation and labor costs are the top two worries among restaurant professionals.
That’s according to the latest Restaurant Labor and Cost Profitability Report from scheduling, payroll and tip management app 7shifts, which found that more than half (52%) of those surveyed ranking it as their primary challenge, and 86% including it in their top three. Labor costs closely follow as the second-most pressing issue, ranked first by 31% of operators and in the top three for 83% of restaurants. 7Shifts says this is a change from previous years, which saw labor as the top issue, and food inflation as the second.
About 40% of restaurants in the 7shifts survey report keeping their labor costs between 20-25% of their revenue, and another 26% fall between 26-30%, making the industry's normal range between 20-30%. Only about 15% of restaurants manage to keep labor costs under 20%, and the same percentage (about 15%) struggle with costs over 30%.
Restaurants that spend a lot on labor are much more likely to cut staff, according to the survey. Seven-in-10 operators with labor costs over 40% say they cut staff, while only 14% of restaurants with average labor costs do the same.
To combat high food and labor costs, most restaurants (around 68%) are now training their staff to handle multiple jobs instead of just firing people. Other popular approaches include changing the number of staff hours they schedule (45%), making their processes work better (41%). However, some restaurant professionals still report reducing their headcount (39%).
Raising menu prices is the most popular way (63%) for restaurants to grow sales, but they're not stopping there. Operators told 7shifts they are also training staff to suggest more expensive items (45%), finding completely new ways to make money (37%), simplifying their menus (34%), or featuring items that make more profit (29%).
About half (49%) of all restaurants surveyed express optimism about technology's role in reducing labor costs, with 21% very optimistic and 28% somewhat optimistic. Only 16% report pessimism, while 34% remain neutral.
[READ MORE: Survey: Restaurant brands investing in several digital areas]
"When it comes to controlling costs, our data has confirmed that successful restaurants are choosing to invest in their people rather than just cutbacks," said Jordan Boesch, CEO at 7shifts. "These restaurants are building sustainable business models for the future. Savvy operators have realized that cross-training team members and leveraging technology reduces labor costs and enhances the overall guest experience — a win-win across the board."
7shifts’ 2025 Restaurant Labor Cost & Profitability Survey collected responses from 511 restaurant professionals across casual dining (53%), quick service/fast casual (33%), and fine dining (10%) establishments. The survey was conducted in partnership with Centiment from Feb. 18-24, 2025.
