What 2025 Actually
Looked Like —
And What It Means for 2026
A straight note on where the industry ended up last year, based on data from Restaurant365, Toast, and the National Restaurant Association.
Three things changed that weren't in last year's conversation: Tariffs hit food costs hard and became a brand-new variable. Nearly half of restaurants weren't profitable last year — that number is now confirmed across multiple industry surveys. And staffing, which dominated the narrative for the past four years, finally dropped out of the top concern.
2025 by the Numbers
Three major surveys — Restaurant365 (4,000 locations), Toast (712 operators), and the National Restaurant Association — all ended up in roughly the same place. The industry generated record sales on paper. But for a lot of operators, the bottom line didn't follow.
The restaurant industry is projected to hit $1.55 trillion in total sales in 2026 — a record number. But sales volume and profitability are two different things. If 42% of operators aren't making money at that volume, the problem isn't the top line. It's what's happening between revenue and the owner's pocket.
The Challenge Rankings Changed
For years, staffing was the industry's loudest problem. That's no longer true. Here's what the R365 2026 survey (covering 2025 performance) shows vs. where things stood:
#1 Recruiting & retaining staff
Finding and keeping people dominated every survey, every panel, every industry conversation.
#2 Food cost increases
#3 Labor cost increases
#1 Sales volume
30% of operators said not enough revenue coming in the door. Traffic softened and didn't fully recover.
#2 Food cost increases — 28% cited this
#3 Labor cost increases — staffing didn't go away, just stopped being #1
Hiring challenges are still real — 42% of full-service operators say they face moderate to extreme difficulty finding staff (Toast, 2025). But the bigger fear right now is whether enough guests are walking in.
Tariffs — The Problem That Wasn't in Last Year's Report
This is entirely new territory. Tariffs introduced in early 2025 created a cost shock that most operators weren't prepared for — and they're not going away.
What's actually getting more expensive
Canadian beef: 25% duty. European cheeses: 20–25% tariffs. Olive oil, prosciutto, wine and spirits from the EU are all affected. There's also a blanket 10% baseline on most other imports. If your menu leans on imported proteins or specialty ingredients, you're absorbing this differently than a burger-and-fries operation.
Most are raising prices — 68% did in 2025, versus 47% the year before. But 48% say they'll raise prices again if inflation and tariffs continue (Toast, 2025). That only works up to a point before guests start ordering less or going somewhere cheaper. The operators in the best position are the ones who actually know their cost per dish and can model what a 10% cost increase does to their margin before deciding whether to raise prices, swap an ingredient, or absorb it.
Where Your Customers Actually Are
The split between dine-in and off-premises isn't a trend anymore — it's the permanent shape of the industry.
And operators can see where it's going: 36% expect even more takeout and delivery orders in 2026, while 32% predict fewer dine-in visits (R365, 2026). Loyalty programs and value offers — daily specials, combos, discounts — now directly influence where guests choose to spend their money. 61% of consumers still say restaurants are essential to their lifestyle, but they're watching every dollar.
More channels means more complexity. You're managing third-party delivery commissions eating into margins, different ticket sizes across channels, loyalty program costs, and packaging expenses — all in addition to your baseline food and labor. If you're only looking at total revenue, you might be growing delivery volume and losing money on every order. You need to know which channel is actually profitable.
The Operators Who Are Investing in Tech
This is where the picture changes for 2026. After years of talk, the investment is actually happening — and the driver isn't excitement about technology. It's survival math.
Where restaurants are already using AI: marketing automation (28%), real-time financial insights (27%), and menu optimization (26%) (Toast, 2025). The operators pulling ahead aren't buying tech for its own sake — they're using it to find margin that's hiding in plain sight.
How These Numbers Map to Your Back Office
Every one of the problems above shows up in your accounting, your reporting, or your vendor invoices. Here's how SBO's service model addresses each one directly.
| What the Data Says | Why It Shows Up in Your Books | What SBO Does About It |
|---|---|---|
| 42% not profitable despite record industry sales new | Most operators don't have a clear view of net margin by location or channel. Sales look fine. Cost creep is invisible. | Monthly P&L by location + real-time reporting dashboards (The Books) |
| 91% hit by food cost increases — worse than they expected | Recipe costs aren't updated. Variance between theoretical and actual food cost goes undetected for weeks. | Recipe-level costing + vendor price tracking — catch cost drift before it hits the P&L (Cost Control) |
| Tariffs hitting 78% of operators, 64% expect 1–10% COGS increase new | Imported ingredient costs are spiking but operators often don't know which menu items are most exposed until it's too late. | AP automation + invoice-level cost tracking flags price changes by vendor and SKU (Cost Control) |
| 68% raised prices in 2025 — up from 47% the year before | Price increases without margin modeling can hurt guest counts more than they help profitability. | Gross margin analysis by menu category to model pricing decisions before making them (advisory) |
| 75% of traffic is off-premises — delivery, takeout, drive-thru (NRA) | Third-party delivery fees, packaging costs, and different ticket sizes create a channel P&L that most operators can't see. | Toast↔QBO integration maps revenue by channel; multi-channel reporting makes delivery profitability visible (The Books · one-time setup) |
| 89% saw labor costs increase — higher than expected | Overtime, benefit costs, and scheduling inefficiencies accumulate unseen when labor data isn't connected to the P&L. | Labor cost tracking in monthly close; tip reconciliation + payroll reconciliation (Labor Control) |
| 52% investing in back-office tech; 86% comfortable with AI | Operators know they need better systems. Most don't know where to start or how to connect what they already have. | Software setup and integration (one-time): Toast, QBO, cost-control tools, payroll — configured to work together from day one |
| Sales volume as #1 concern — 60% reported softer traffic in 2025 | Without weekly or daily reporting, slow periods aren't caught fast enough to adjust staffing, purchasing, or marketing spend. | Weekly financial dashboards + real-time sales-vs-labor variance alerts (Labor Control) |
SBO's Service Model
One base — The Books — plus two add-ons, Cost Control and Labor Control, and a plan tailored for food trucks — with one-time setup and advisory when you need it. Flat monthly fee plus the software you own; month-to-month. Everything is built around restaurants specifically — we do not try to be generalists.
The base · any POS
Clean books in QuickBooks and the weekly cost numbers — food cost, COGS, labor, prime — on whatever POS you run. Books closed monthly, bills paid, sales tax set aside, payroll posted, with The SBO Brief weekly and monthly. From $1,035/mo.
The must-have add-on
Add Cost Control and we read every invoice and count, show your true food cost, and flag exactly where it is leaking — over-portioning, price creep, waste. It usually hands back more than it costs. +$460–$635/mo.
You run the floor, we run the numbers
Add Labor Control and we read your hours against your sales, keep your tip pool pooled and compliant on the books, and put the labor heads-up in your SBO Brief — early in the week, while the schedule can still be fixed, not after the money is spent. +$235/mo.
Running a truck?
The Food Truck plan is flat and simple, from $300/mo. See The Books, both add-ons, and every price on our Services page.
If 42% of restaurants aren't profitable, and 9 in 10 operators say costs are a serious problem — the question isn't whether you need better financial visibility. The question is how long you can afford to operate without it. Good bookkeeping isn't a line item. It's how you find the margin that's already there.
Talk to SBO — No Pitch, Just Numbers
We work with independent restaurant operators who are tired of finding out their margins were wrong after the fact. If any of the numbers in this brief feel familiar, let's look at your books together.
Sources: Restaurant365 2026 State of the Restaurant Industry Survey (4,000 U.S. restaurant locations, covering 2025 performance) · Toast 2025 Voice of the Restaurant Industry Survey (712 restaurant decision-makers, April–May 2025) · National Restaurant Association 2026 State of the Restaurant Industry Report · NRA Off-Premises Dining Research 2025 · Paytronix 2025 Tariff Impact Report · FSR Magazine: Tariffs and Inflation 2025 · Restaurant Dive industry coverage 2025–2026
This document was prepared by Small Business Operators (SBO) for informational purposes. All statistics are sourced from the publications listed above. SBO is not affiliated with Restaurant365, Toast, or the National Restaurant Association.