Navigating the 2024-2025 Restaurant Economy: Trends, Pain Points & New Paths to Profitability

“Margins are tight, costs are up, and yet—the restaurant industry is still growing.” Welcome to the current landscape of food service in America.

The U.S. restaurant industry is projected to hit $1.5 trillion in sales by the end of 2025—a record-breaking number fueled by strong consumer demand. But behind that top-line growth? A minefield of challenges.

From skyrocketing labor and food costs to policy pressure and growing competition, restaurant owners are navigating a complex and ever-evolving reality. But the good news? There are clear strategies—and partners—that can help.

Let’s break it down.

The Economic Outlook: Big Numbers, Big Pressure

Record Revenue, Squeezed Margins

Restaurants are booming in terms of sales—2024 marked the first year the industry passed $1 trillion in total revenue. And projections show that number will climb to $1.5T by end of 2025.

But profits? Not so much.

• Food costs have jumped 41% since 2023
• Labor costs now eat up 30–35% of revenue in full-service restaurants
• 88% of operators report higher payroll in 2024, and it’s only going up in 2025 (source)

Workforce Woes

The industry employs 15.9 million people, but labor shortages persist. With staffing levels still 3–4% below pre-pandemic numbers, many restaurants are operating understaffed—and under strain.

82% of operators say they’re still short on workers (GBQ Year in Review)

Meanwhile, wages have risen 18% since 2022. That’s great for workers—but tough on margins.

Operational Challenges: What’s Hurting Restaurants Most

Labor Costs: The #1 Pain Point

Full-service restaurants are getting hit hardest. Labor now takes up nearly 35% of their revenue, and turnover remains high—34% of servers leave each year.

What restaurants are doing:

• 29% are using AI for smart scheduling
• 37% are increasing training to retain employees (source)

Food Costs and Supply Chain Issues

Costs for key ingredients—especially proteins (+18%) and dairy (+22%)—continue to rise. Operators are carrying more inventory to hedge against shortages, but that comes with its own risks: spoilage and tied-up capital.

And with 67% raising menu prices by 13% on average, customers are starting to push back—especially around the $20 entrée mark.

How Operators Are Fighting Back (and Winning)

Investing in Tech to Boost Margins

Despite thin margins, 39% of operators are prioritizing technology in 2024 (source).

Here’s what’s making a real difference:

• Inventory management systems: Reduced food waste by 18%
• Dynamic pricing platforms: Real-time price adjustments
• Integrated POS systems: Helps track labor + food costs in one view
• Kitchen robotics + server tablets: Cut labor costs and increase upsells

But tech isn’t cheap. In fact, 58% of independents say it’s too expensive to implement fully (source).

Consumer Trends: What Diners Want in 2025

Experience over everything.

Today’s diners are making decisions based on how the meal feels, not just what it costs. According to the State of the Industry Report:

• 90% of fine dining and 87% of casual spots are prioritizing in-person dining
• 68% of QSR patrons want customization and build-your-own meals
• 54% of full-service customers prefer digital menus with allergen filters
• Private dining bookings are up 41% in urban areas (source)

Value Isn’t Just Price Anymore

Customers define value across multiple touchpoints:

What Matters Most	% of Diners	What Operators Are Doing
Portion quality	38%	Upgrading ingredients
Order accuracy	29%	Using AI quality checks
Speed of service	22%	Deploying KDS systems
Loyalty rewards	11%	Building custom apps

(Source)

Growth Opportunities (and How Smart Operators Are Scaling)

Format Innovation

Operators are getting creative to reduce costs and reach more customers:

• Ghost kitchens now make up 22% of urban growth
• Virtual brands generated 12% of QSR revenue in 2024
• Catering is booming—54% of full-service restaurants added a catering arm (source)

Suburban Surge

Suburbs are quietly winning. Fast-casual locations in suburban strip malls are seeing:

• 15% higher average checks
• 41% of new builds targeting non-urban centers (source)

Policy + Market Forces: What’s Changing the Game

Labor Regulation Shakeups

In California, the Fast Food Council set a $20/hour minimum wage, with more states likely to follow (source). If tip credits disappear, 12% labor cost increases could hit overnight.

Sustainability Costs

With single-use plastic bans, operators are spending an average of $18,000/year to stay compliant. And 73% of restaurants in urban areas are now required to reduce food waste (source).

Global Trade and Equipment Costs

• Tariffs have added 14% to equipment costs
• Specialty ingredients like Italian cheeses face 9% surcharges
• Lead times for imported goods have increased by 22% (source)

Strategic Must-Dos for Restaurant Success in 2025

Here are four non-negotiables if you want to not just survive—but grow:

1. Optimize Your Workforce

Invest in predictive scheduling and cross-training to combat turnover. Leverage AI tools to run leaner teams without sacrificing service.

2. Redefine Value for the Customer

Use data to create promotions that speak to portion size, customization, and speed—not just discounts.

3. Expand Smarter, Not Bigger

Virtual brands, ghost kitchens, and suburban models require 40% less upfront capital. This is a huge opportunity for lean, profitable growth.

4. Stay Ahead of Compliance

Whether it’s wage laws or sustainability rules, understanding policy changes early protects your bottom line.

Where SCG Funding Fits In

At SCG Funding, we’ve help restaurant owners navigate exactly these kinds of pressures. Whether it’s:

• Working capital to cover payroll or food costs
• Equipment financing for a new POS or kitchen buildout
• Or a flexible line of credit to keep you nimble during expansion

We’ve got our finger on the pulse of the industry. We know what’s changing. And we’re here to make sure your restaurant doesn’t miss a beat.

“Every great restaurant deserves a financial partner in its corner.” Let’s talk about how we can help you stay ahead in 2025 and beyond.

Apply Today to learn more.