The James Beard Foundation (JBF) announced today the findings of its “2025 Independent Restaurant Industry Report,” revealing an industry at inflection as it faces challenges across multiple fronts.
In collaboration with Deloitte, 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,” Clare Reichenbach, CEO, James Beard Foundation, said in a news release. “While encouraging signs exist, the industry continues to navigate an increasingly complex landscape. We remain more committed than ever to supporting these vital businesses—the backbone of local economies and communities—by providing training and resources to build business resilience, as well as championing and spotlighting our industry across all our platforms.”
Despite substantial challenges, the report reveals an industry demonstrating remarkable fortitude and innovation. Through strategic adaptation and creative problem-solving, independent restaurants are actively evolving their operations to meet current market demands, while preparing for future uncertainties. 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.
2025 STATE OF THE INDEPENDENT RESTAURANT INDUSTRY
Independent restaurants enter 2025 at a pivotal moment, as the industry confronts multiple challenges and adapts to an increasingly complex operating environment that extends well beyond the lingering effects of the pandemic.
Following a period of cautious optimism in 2023, the industry encountered significant headwinds throughout 2024, including persistent inflation, escalating costs, workforce challenges, and impacts from extreme weather events. While business performance showed encouraging signs of improvement, independent restaurants—already operating on thin margins—face mounting pressure on all fronts. Compounding these circumstances, consumer behavior continues to shift in today’s high-cost environment, as diners reduce their frequency of dining out and gravitate toward more value-driven choices.
KEY FINDINGS
2024 Business Performance:
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. Despite a backdrop of significant challenges, this shift suggests a more optimistic outlook among restaurant owners and operators.
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.
Despite pricing adjustments, 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. Restaurant owners are navigating additional cost pressures, such as the minimum wage increases across more than 20 states and policies like California’s FAST Act. While higher wages and benefits correlated with improved business performance, they also necessitated menu price increases, creating a challenging balance between operational sustainability and customer affordability.
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 trafficin 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,” Evert Gruyaert, US Restaurants & Food Service leader, and principal, Deloitte Consulting LLP, said. “As these establishments face rising costs, labor shortages, and shifting consumer behaviors, their innovative and adaptive strategies are key to their success. Deloitte is proud to collaborate with the James Beard Foundation, helping the organization share insights and support these establishments to thrive and continue enriching our communities.”
The Annual Industry Report is also part of a newly launched “JBF Institute,” which offers tools, training, and resources to support the success of independent restaurants and industry professionals. Informed by research on key industry challenges, the JBF Institute provides a comprehensive suite of programs, events, and networking opportunities designed to address these issues and foster meaningful connections within the industry.
The James Beard Foundation (JBF) is a 501(c)3 nonprofit dedicated to leading chefs and the broader culinary industry towards a new standard of excellence. Its guiding principle, Good Food for Good, informs our vision of a vibrant, equitable, and sustainable independent restaurant industry that stands as a cornerstone of American culture, community and economy, and drives towards a better food system. For nearly 40 years, JBF has been instrumental in recognizing, amplifying, educating, and training the individuals who shape American food culture. Learn more at jamesbeard.org.
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