Operations

Tariffs, rising wages forcing restaurants to hike menu prices

Photo: Expert Market

October 3, 2025

Facing a "double squeeze" from rising labor costs and external market pressures like tariffs, many U.S. food and beverage businesses are raising menu prices to protect their bottom line, according to the Expert Market 2025 Food and Beverage Report, sponsored by hospitality platform Toast.

The report revealed 76% of businesses report rising ingredient costs are significantly affecting profitability. The study, which surveyed 628 food and beverage professionals in the U.S. in August 2025, found the biggest impacts on operations are staff wages and external market pressures like inflation and tariffs.

Wages were cited by 57% of businesses as having the highest cost impact on their operations. To offset these increases, 62% of businesses stated they have had to raise menu prices, a move that directly risks damaging the customer experience.

Tariffs are also a major factor, with 47% of businesses stating they directly led to increased menu prices for customers. Additionally, 41% reported that U.S. tariffs have impacted ingredient prices and supply costs. More than 25% of professionals named supply chain volatility as a major obstacle.

"The restaurant industry has always worked on tight profit margins, so when there's a rise in operating costs businesses have no choice but to pass that on to the customer," Chris Maillard, editor of Expert Market, said in the report. "It's not a great situation to be in, with a real risk of losing customers, but they're backed into a corner at the moment."

Maillard said the food and beverage sector often serves as a "canary in the coalmine" for the wider economy, and this could signal that tariffs will soon begin to bite across other industries.

Rising ingredient prices are a combination of inflation and tariffs. The report also found that 40% of businesses said the rising cost of utilities has had a significant impact on their profitability.

Expert Market is a business solutions provider.