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Inflation is Straining Restaurant Operations


Sharp increases in food and labor costs are having a dramatic impact on restaurants’ bottom line.

  • Wholesale food prices are up nearly 13.2%.
  • The typical small business restaurant run on a 3-5% pre-tax margin. Food and labor costs are the two most significant line items for a restaurant, each accounting for approximately 33 cents of every dollar in sales. 
  • Other expenses – including rent, utilities, and other direct operating costs – generally represent about 29% of sales. For the vast majority of restaurant operators, these three categories are making up a larger share of sales than they did before the pandemic. 

Latest Economic Indicators

88% of operators say their total food costs (as a percent of sales) are higher than they were in 2019. Wholesale food prices are up 13.2% over 12 months ago and labor costs rose 15.1% December 2020 to December 2021. In August, government data showed menu prices rose 8% in the last 12 months, leaving a large gap between food costs and what restaurant owners are charging.

Read the Association’s Chief Economist’s analysis of the latest employment, food costs, and menu prices below.