Restaurant Owners Face Hard Choices as Inflation Squeezes Profits

The Rising Cost of a Meal

As inflation continues to drive up the cost of food and labor, restaurant owners across the country are being forced to make difficult decisions about how to keep their doors open without losing customers. A recent survey by Toast, a leading restaurant management software company, revealed that profitability remains the top concern for restaurant operators heading into 2026, with nearly half saying they may raise menu prices if inflation persists.

According to the National Restaurant Association, maintaining even a modest 5% profit margin would require the average restaurant to increase prices by roughly 31%. “Raising menu prices is typically a last resort,” said Chad Moutray, the association’s chief economist, “but with the rising costs of food and labor, their operating math still has to work.”

A Balancing Act Between Cost and Customers

For small business owners like Michael Brafman of The Sandwich Board in New York City, that “operating math” is becoming increasingly complex. “You can only get away with charging so much for an egg sandwich,” Brafman said. “Nobody’s spending $17 on an egg sandwich just so you can keep your margins.”

Brafman noted that the costs of eggs, meat, and dairy — the core ingredients for his menu — are “increasing exponentially.” As a result, operators are left walking a “tenuous line,” trying to sustain their businesses without pricing out loyal customers.

Finding Value Beyond the Plate

In Virginia, chef and innkeeper John Loeffler of The Inn at Gristmill Square said he’s seen similar challenges. Beef prices alone have jumped from $14.75 to $17.99 a pound in just months. For Loeffler, adapting means redefining what value means for guests. “We’re in the business of taking care of people, nourishing them, making them feel good … and making them feel good about spending money,” he said.