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The 2025 Independent Restaurant Industry Report from the James Beard Foundation reveals an industry at inflection as it faces challenges across multiple fronts. The report is a nationwide study providing a data-driven look at the current state of independent restaurants and their outlook for 2025, examining factors from rising costs and labor challenges to shifting consumer behavior.
"This year's report underscores the resilience, tenacity, and ingenuity of independent restaurants in the face of mounting pressures," said Clare Reichenbach, CEO, James Beard Foundation. "While encouraging signs exist, the industry continues to navigate an increasingly complex landscape.”
The study identified four major trends that are reshaping the industry landscape:
- Overcoming barriers to increase guest spend
- Intentional engagement to deepen guest connection
- New ways to attract and retain a winning team
- Increased urgency to evolve business models
The research findings stem from in-person chef interviews and a nationwide survey of over 400 restaurant owners and operators conducted in 2024. The study represents a broad cross-section of the independent restaurant industry—spanning 47 states and all four census regions—with respondents ranging from fine dining establishments to fast-casual venues, breweries, and caterers.
Key findings include:
- Business performance improved slightly in 2024, with 54% of respondents reporting positive results compared to 46% in 2023. Only 14% of respondents described business performance as poor/very poor, which was down from 23% in 2023.
- Revenue growth in 2024 was largely driven by menu price adjustments. Although concerns about customer sensitivity influenced pricing decisions, only 9% of restaurants did not change prices in 2024, down 19% from 2023, indicating a stronger shift towards strategic price increases.
- Profitability remained challenging in 2024. While 28% of respondents reported maintaining the same profit levels as in 2023—up from 17% the previous year—50% still reported lower profits, only a slight improvement from 56% in 2023. This may suggest that although revenue increased, higher operating costs may continue to pressure margins.
- Labor costs continue to rise. Notably, 92% of respondents reported increasing staff wages in 2024, up from 84% in 2023, reflecting the ongoing rising cost of labor.
THEME I: Overcoming barriers to increase guest spend
● Rising food, labor, and general operating costs were the most pressing concerns in 2024 among respondents, further tightening thin margins. Because of this, 55% of respondents increased prices on their entire menu, 36% increased prices on a few items, and only 6% made no menu changes. Most increases were between 5% and 10%—on average a less significant increase than in 2023.
● Restaurants feel they've reached a ceiling on raising prices, with those increasing prices by over 15% reporting poorer business performance, decreased profits, and fewer customers.
● Food costs were ranked as the top concern for 2025, with 76% of respondents identifying increasing food costs as the primary trend affecting the industry.
● Extreme weather events have become a major cost driver, with 92% of respondents believing it impacted their business in 2024. From Hurricanes Milton and Helene to Los Angeles wildfires, these events have disrupted operations and supply chains nationwide, with 79% reporting that they have led to rising general costs.
THEME II: Intentional engagement to deepen guest connection
● Dwindling foot traffic in recent years has resulted in a decline in “regulars,” making customer loyalty more elusive. The third-highest ranked customer trend in 2024 was the changing (decreased) frequency of dining out, with over 70% of respondents reporting fewer patrons than last year.
● To combat this, some establishments are implementing sophisticated engagement strategies that combine online and in-person experiences to foster deeper, more personalized connections with guests.
● Social media has emerged as a primary engagement tool, with nearly 75% of restaurants leveraging it for marketing purposes and the majority anticipating it to be the second most influential trend in 2025 after increased food costs.
● Establishments that increased their focus on in-person engagement reported stronger business performance compared to those who did not in 2024.
THEME III: New ways to attract and retain a winning team
● Staffing continues to be a challenge, with the majority of independent restaurant owner and operator respondents citing difficulty in hiring and retaining high-quality staff as one of their top five concerns.
● There is a fundamental shift in workforce expectations, with employees seeking both higher compensation and enhanced quality of life benefits. To meet this need, 72% of respondents increased wages by more than 10% in 2024.
● Restaurants are also implementing innovative retention strategies. Cross-training programs (53%) and flexible scheduling arrangements (39%) have become widely adopted practices among respondents, allowing businesses to maintain staff engagement while managing rising labor costs.
● The research indicates that restaurants offering career advancement opportunities experienced 3.5 times less difficulty in retention and 1.2 times less difficulty in finding staff.
THEME IV: Increased urgency to evolve business models
● The number one issue in 2024 was the rise in general costs such as food, packaging, and repairs, a concern that doubled in importance year-over-year, followed by the rising cost of labor. Looking ahead to 2025, 76% of respondents expect these cost pressures to remain the most significant factor impacting the independent restaurant industry.
● Simple-yet-effective business solutions are no longer sufficient to maintain profitability in today's complex operating environment. As such, over 85% of restaurants surveyed implemented at least one non-traditional business model in 2024, testing changes such as tipping structures, staffing models, and alternative revenue streams like pop-ups, event spaces, and catering.
● Notably, establishments that embraced change reported stronger performance metrics. Those experimenting with non-traditional staffing models indicated expectations of higher or similar profits, while those maintaining traditional approaches were more likely to anticipate lower profits.
"The 2025 Independent Restaurant Industry Report reveals how independent restaurants are not just surviving but actively transforming in response to today's challenges," said Evert Gruyaert, US Restaurants & Food Service leader, and principal, Deloitte Consulting LLP.
To read the full report click here.
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