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Diners already concerned about the cost of eating out may be disappointed to learn that many restaurants are considering raising prices to keep up with inflated food and drink costs.
Restaurant management software company Toast recently released its 2025 Voice of the Restaurant Industry Survey, revealing that improving profitability was the top concern for operators headed into next year.
Operators ranked inflation (20%), marketing (16%) and hiring (16%) as their top three business pain points.
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Nearly half of all 712 restaurant decision-makers surveyed (48%) said they plan to increase menu prices if inflation continues to be a factor.
The National Restaurant Association estimates that, to maintain a 5% profit margin, the average restaurant needs to raise prices by 31%, according to data compiled by the D.C.-based industry trade group earlier this year.
The average restaurant would need to raise prices by 31% to maintain a 5% profit margin, according to the National Restaurant Association. (iStock)
“Raising menu prices is typically a last resort for restaurant operators, but with the rising costs of food and labor, their operating math still has to work,” Chad Moutray, chief economist for the National Restaurant Association, told Fox News Digital.
Small business owners like Michael Brafman, who operates The Sandwich Board in New York City, are concerned about it.
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“The basic math is whatever product you have, you divide it by .3, and that’s what the product should cost to the consumer to operate at that healthy margin,” Brafman told Fox News Digital. “If the prices continue to increase, there’s only [so much] that the consumer will be willing to pay.”
The sandwich shop owner said he wrestled with this issue during the egg crisis.
“I held out a long time to raise the [price] of our egg sandwiches,” Brafman said.
Menu prices that are too high can scare off customers — which is a concern for restaurant operators. (iStock)
He added, “You can only get away with charging so much for an egg sandwich. … Nobody’s spending $17 on an egg sandwich just so you can keep your margins.”
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He tacked on an extra dollar, he said, “which was very marginal, but people were concerned.”
Increasing menu prices can be an added challenge when the business is new.
“Nobody’s spending $17 on an egg sandwich just so you can keep your margins,” a New York City restaurant owner told Fox News Digital. (iStock)
“It’s always a tenuous line to walk,” Brafman said. “It is a game of chicken.”
Since opening The Sandwich Board last year, Brafman said he’s seen a spike in the cost of proteins.
“Proteins are increasing exponentially — eggs, dairy, meat, poultry, all of the core parts of the sandwich,” he said. “When a steak per pound goes from $7 to $11, that’s an unrealistic price increase.”
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Passing that off to customers could spell bad news for cost-conscious diners.
“I have people [who] come here repeatedly per week, and that’s the fear,” said Brafman. “How many times will they stop coming because the cost is prohibitive?”
Prices for proteins like eggs, dairy and meat are “increasing exponentially,” a sandwich shop owner said. (iStock)
John Loeffler, innkeeper and chef at The Inn at Gristmill Square and Waterwheel Restaurant in Virginia, said he’s been watching similar trends play out, just at a different price tier.
“Beef is always a huge, huge seller for us. It is one of our more popular items,” Loeffler told Fox News Digital.
In June, a whole loin of certified Angus ribeye cost $14.75 a pound, he said. Today, it’s $17.99.
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As costs climb, keeping guests happy becomes about more than the food alone, Loeffler said.
“How do you make money, sell people something that they feel good about and feel a value, even at a higher price point?” he said. “I think that’s the challenge facing all restaurants — adding value as menu prices go up.”
John Loeffler, chef at The Inn at Gristmill Square’s Waterwheel Restaurant in Virginia (shown at left), told Fox News Digital the rising cost of beef has forced him to consider other ways of providing value to his customers. (Forged Film Company for The Inn at Gristmill Square and Waterwheel Restaurant)
After 30 years in the business, Loeffler said he’s learned to think differently about profit.
“I think about margins less than percentages,” he said.
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His approach often means absorbing part of the cost to preserve the dining experience.
“At the end of the day, we’re in the business of taking care of people, nourishing them, making them feel good … and making them feel good about spending money. That’s our job.”
