Survey: Restaurants continue to adjust to industry challenges, cost pressures

The cost of food is top of mind for restaurant professionals.

Food inflation and labor costs are the top two worries among restaurant professionals.

That’s according to the latest Restaurant Labor and Cost Profitability Report from scheduling, payroll and tip management app 7shifts, which found that more than half (52%) of those surveyed ranking it as their primary challenge, and 86% including it in their top three. Labor costs closely follow as the second-most pressing issue, ranked first by 31% of operators and in the top three for 83% of restaurants. 7Shifts says this is a change from previous years, which saw labor as the top issue, and food inflation as the second.

About 40% of restaurants in the 7shifts survey report keeping their labor costs between 20-25% of their revenue, and another 26% fall between 26-30%, making the industry’s normal range between 20-30%. Only about 15% of restaurants manage to keep labor costs under 20%, and the same percentage (about 15%) struggle with costs over 30%.

Restaurants that spend a lot on labor are much more likely to cut staff, according to the survey. Seven-in-10 operators with labor costs over 40% say they cut staff, while only 14% of restaurants with average labor costs do the same.

To combat high food and labor costs, most restaurants (around 68%) are now training their staff to handle multiple jobs instead of just firing people. Other popular approaches include changing the number of staff hours they schedule (45%), making their processes work better (41%). However, some restaurant professionals still report reducing their headcount (39%).