Food inflation forces restaurants to consider 31% price increases following revealing survey

Diners already concerned about the cost of dining out may be disappointed to learn that many restaurants are considering raising prices to address food and drink price inflation.

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 heading into next year.

Operators ranked inflation (20%), marketing (16%), and hiring (16%) as their top three business issues.

PRICE IN LAS VEGAS? 5 COSTLY STEAKS THAT CAN CUT TOURISTS’ WALLETS

Nearly half of the 712 restaurant decision-makers surveyed (48%) said they would consider raising menu prices if inflation continues to be a factor.

The National Restaurant Association estimates that to maintain a 5 percent profit margin, the average restaurant must raise prices by 31 percent, according to data compiled by the Washington-based industry trade group earlier this year.

“Raising menu prices is usually a last resort for restaurateurs, but with food and labor costs rising, their operational math still has to work out,” 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, worry.

VEGAS TIPS DECREASE DRASTICALLY AS VISITORS SAY SERVICE DOESN’T MATCH HIGHER COSTS

“The basic math is that whatever product you have, you divide it by 0.3, and that’s what the product would have to cost the consumer to operate at that healthy margin,” Brafman told Fox News Digital. “If prices continue to rise, consumers will only be willing to pay a limited amount.”

The sandwich shop owner said he struggled with this problem during the egg crisis.

“I resisted for a long time raising the (price) of our egg sandwiches,” Brafman said.

He added: “You can only get away with charging so much for an egg sandwich. . . . Nobody spends $17 on an egg sandwich just so you can keep your margins.”

CLICK HERE TO SUBSCRIBE TO OUR LIFESTYLE NEWSLETTER

He added an extra dollar, he said, “which was very marginal, but people were concerned.”

Rising menu prices can be an additional challenge when the business is new.

“It’s always a fine line to walk,” Brafman said. “It’s a game of chicken.”

Since The Sandwich Board opened last year, Brafman said he has seen an increase in the cost of protein.

“Protein is increasing exponentially: eggs, dairy, meat, poultry, all the sandwich essentials,” he said. “When a steak per pound goes from $7 to $11, that’s an unrealistic price increase.”

CLICK HERE FOR MORE LIFESTYLE STORIES

Passing this on to customers could be bad news for cost-conscious diners.

“I have people who come here several times a week, and that’s the scary part,” Brafman said. “How many times are they going to stop coming because the cost is prohibitive?”

John Loeffler, innkeeper and chef at the Inn at Gristmill Square and Waterwheel Restaurant in Virginia, said he’s seeing similar trends playing out, but at a different price point.

“Beef is still a very big seller for us. It’s one of our most popular products,” Loeffler told Fox News Digital.

In June, a whole loin of Certified Angus ribeye cost $14.75 per pound, he said. Today it’s $17.99.

TEST YOURSELF WITH OUR LATEST LIFESTYLE QUIZ

As costs rise, customer satisfaction isn’t just about food, Loeffler said.

“How do you make money, sell people something that makes them feel good and gives them value, even at a higher price?” he said. “I think that’s the challenge all restaurants face: adding value as menu prices rise.”

After 30 years in the business, Loeffler said he has learned to think about profit differently.

“I think margins less than percentages,” he said.

CLICK HERE TO GET THE FOX NEWS APP

Their approach often involves absorbing part of the costs to preserve the dining experience.

“At the end of the day, our mission is to take care of people, to feed them, to make them feel good…and to make them feel good about spending money. That’s our job.”