BOSTON — Rising food prices and higher labor costs are posing challenges to restaurants as they strive to maintain reasonable prices and remain in business.
As restaurants grapple with economic pressures, consumers are adapting their dining habits, leading to mixed expectations for the industry’s future.
An industry survey conducted by KPMG found that 62 percent of restaurant owners expect business to decline in the coming year, while 19 percent anticipate no change, and another 19 percent foresee an increase in traffic.
Sticker shock, once associated mainly with car buyers, is now affecting diners as they encounter $25 burgers on menus.
“I think that everything that used to be $7 is now $15 and everything that used to be $15 is $20,” said one diner, expressing frustration over the rising prices.
Seth Gerber, co-owner of four MIDA restaurants around Boston and a teacher at the Boston University School of Hospitality Management, noted that costs have increased across the board, not just for food and beverage, but also for labor, rent, and software services.
“I think the restaurant industry is often representative of what’s happening in the overall macro economy and in society.”
Stephen Kates, a certified financial planner at Bankrate.com, commented on the changing consumer behavior, stating, “Dining out is absolutely non-essential. I think that for a lot of people post-pandemic, it was something that they look at as a celebratory event.”
But now they’re more cautious, added Kates, focusing on saving during a time of economic uncertainty.
Many diners are adjusting their habits due to rising prices, with some opting for takeout instead of dining in, while others go out less frequently and plan their outings more thoughtfully.
One woman told Boston 25 News, “I think sometimes it’s just like some things aren’t worth how expensive they are.”
Gerber explained that mid-scale, mid-market full-service restaurant chains face the most pressure due to their price-sensitive and value-oriented nature, making it difficult for them to raise prices.
Gerber expects higher-priced restaurants to fare better but warns that even a slight decline in traffic can significantly impact financial margins.
Restaurants and the food service industry are a significant part of the economy, generating about a trillion dollars in activity and employing approximately 16 million workers.
Download the FREE Boston 25 News app for breaking news alerts.
Follow Boston 25 News on Facebook and Twitter. | Watch Boston 25 News NOW
©2025 Cox Media Group
/cloudfront-us-east-1.images.arcpublishing.com/cmg/7QOJU3BNCJERBNKJC5LWTBYFLU.png)
