Industry Study Reveals Resilience and Evolution in Independent Restaurant Sector Despite Significant Economic Challenges
New York, NY (RestaurantNews.com) 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,” said Clare Reichenbach, CEO, James Beard Foundation. “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.
To read the full report click here. Highlights of key findings are below.
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 o