Labour & sales issues are 2025’s top hurdles for restaurants & cafés

Labour issues and rising food costs remain the biggest challenges for restaurants and cafés heading into 2025 according to a new State of the Restaurant Industry survey. Findings from Restaurant365’s annual industry survey reveal 2024’s top challenges and opportunities and their 2025 priorities, including increased marketing and sales efforts alongside new benefits and programs to attract and retain staff.

Participants in the new survey, which included restaurant leaders representing more than 6,200 locations, reported continued food and labour cost increases, with 88% experiencing rising staff expenses, compared to 89% in last year’s annual survey, and 86% reporting an increase in food costs. For those with rising labour, 51% reported a 1% to 5% increase, 41% experienced a 6% to 14% increase, and 8% saw labour costs rise more than 15%. The most significant impact was on restaurants’ ability to achieve their maximum potential, with 59% of respondents saying labour challenges led to operating below full capacity.

For food, 53% reported a 1% to 5% jump, 37% saw a 6% to 14% increase, and 10% saw a more than 15% rise. The primary response was menu price increases, with nearly 61% of respondents adjusting prices to cope with the new reality.

Looking to 2025, restaurant leaders expect waves in the year ahead, with 32% pinning recruitment and retention as their top challenge, 27% most concerned about rising food costs, and 21% flagging sales volume as the main hurdle.

Despite potential challenges, the industry is both optimistic, as total restaurant sales crested USD $1 trillion for the first time on record, and ready to pivot to continue growing.

“As the second largest employing industry in America, it’s no wonder labour is the top concern for our industry,” said Restaurant365 CEO and co-founder Tony Smith. “We remain committed to investing and developing our platform to help restaurants across America employ millions while also keeping food costs in check and boosting their sales.”

More than half of those surveyed (55%), said increasing sales is 2025’s top priority, followed by reducing costs and enhancing guest experiences. Costs, however, will remain a challenge, with 82% of respondents expecting food costs to increase and 77% predicting rising labour expenses.

To combat revenue challenges, 36% of leaders said their top investments would be in enhanced sales and marketing technology, promotions, and loyalty programs, alongside 27% who are planning staff investments, including enhanced training, salaries, recruitment, and benefits.

As operators look to bolster these two key areas, they’re also closely watching employee training and guest preferences. At present, 58% of respondents said they provide one to two hours of training per week, with most of it, 45%, happening shoulder-to-shoulder and another 21% on digital platforms. Deploying training to enhance operators and guest experience is key, especially as restaurant operators expect continued shifts in consumer preferences and employee turnover challenges, with 39% of those surveyed seeing turnover in the 11% to 25% range. For shifting consumer preferences, 34% expect more takeout and delivery in 2025, 28% expect greater demand for healthier options, and 24% expect less frequent dine-in visits. How leaders meet these needs will become increasingly important, as nearly half of respondents said third-party delivery services account for between 11% and 30% of revenue.

Restaurant365 is a back-of-house accounting, inventory, workforce management, and payroll solution developed specifically for the restaurant industry. For more information, visit restaurant365.com.