Editor’s note: This is the first in a multi-part series that will look into the state of full-service restaurants for the coming year. The second part will be on labor (you can find that story here).
There are a lot of ways to describe 2025 for restaurants. But perhaps the best way to phrase it is there wasn’t a ton of predictability. Chipotle CEO Scott Boatwright noted earlier in the year the consumer retreated to the sideline. It felt as though diners became hesitant with discretionary income and pulled forward larger purchases in fear of what might come later.
It was a dynamic, unlike some past financial downturns, where restaurants didn’t exactly land in the “affordable luxury” column. Fear of financial instability led to a low-traffic climate for an industry that, for years ahead of COVID, dealt with oversaturation. Too much choice, too many sites, and not enough visits to go around. Tack on years of inflation and restaurants struggled to drive transactions while constantly working to balance higher costs with a delicate customer.
Specifically for full-service operators, TouchBistro said in its American State of Restaurants Report for 2026 released this week, “unpredictable” became a part of the operating reality.
Between tariffs (justly or not) altering ingredient costs, labor expenses hitting record levels, and consumers scrutinizing every menu price increase, full-serves found themselves navigating an environment as complex as any.
Many restaurants, the company said, responded by returning to levers they hoped were in the rear-view—raising prices, slicing operating hours, and making difficult menu adjustments.
Yet despite persistent setbacks, 2025 data from 600-plus full-service operators showed another aftershock: operators found ways to win through evolving avenues. Profit margins returned to double-digits for the first time since 2022. Traffic in sit-down dining moved upward. Moreover, debt levels dropped significantly. That in particular, TouchBistro said, could suggest financial strain might finally be letting up.
How full-service restaurants got there in 2025 owes to a few observations. Technology continues to become smarter. There are growing solutions to tap. Full-serves grabbed share by leading with experience in a high-cost space that saw many quick-serves press the ceiling and try not to topple over it.
Here’s a look at how operators survived 2025 challenges and how they’re positioning for whatever come next.
The financial picture
As TouchBistro mentioned, 2025 had no shortage of cost pressures. Operators, though, leaned into adjustments and discipline to guard profitability. Profit margins last year climbed to 10.5 percent—the first double-digit result since 2022. Traffic growth helped, with 88 percent of surveyed operators seeing visits increase over the past year.
Average profit margins by year
- 2025: 10.5 percent
- 2024: 9.8 percent
- 2023: 9.3 percent
While the average 32 percent bump was slightly below what operators experienced in 2024 (34 percent), it did show a steady line after post-pandemic spikes.
TouchBistro said return-to-office dynamics reshaped weekly traffic patterns. Sunday remained the busiest day overall. But weekday dining strengthened. Monday mornings and lunch periods saw renewed activity as well, like you’d expect with people returning to central sites for work.
Dinner service from Tuesday to Friday surfaced as busy times for full-serves, reflecting, again, a hybrid evolution of the workplace that’s brought more employees into offices mid-week.
“This shift in traffic patterns suggests workplace policies are directly influencing when and where diners choose to eat out,” the company said.
With profit margins sloping upward, operators reported another encouraging trend. Sixty-six percent said they now carry debt. In 2024, it was 78 percent. And those who said they do hold some, said they owe an average of $44,625, down from $51,040 the previous year.
TouchBistro said the shift might signal an easing of the cash-flow crisis that’s plagued the industry following COVID. Fewer operators in the survey cited loans and debts as a major financial strain—6 instead of 10 percent. So, potentially, more operators are either paying down existing obligations or avoiding new ones altogether.
Still, 40 percent of operators said they took out new loans or financing in the past year. Bank loans were the most common option. TouchBistro said borrowing wasn’t driven by desperation. Rather, it was strategic financing to manage inventory costs and seasonal fluctuations. The key difference from previous years, it added, is operators are taking out less and paying back faster.
Type of loan or financing taken out in the past year
- Bank loan: 38 percent
- Business line of credit (LOC): 29 percent
- Small Business Administration loan: 20 percent
- Alternative lender loan (online options such as Funding Circle): 19 percent
- Equipment financing: 17 percent
- Merchant cash advance: 17 percent
- Crowdfunding: 17 percent
All this isn’t to say there aren’t burdens. Food costs continue to rocket. More than a quarter (28 percent) of operators said food and inventory costs today represent their greatest financial strain. In L.A., the figure rose to 38 percent. TouchBistro said tariffs and trade restrictions were to blame, as 82 percent of operators felt these policies directly contributed to their restaurant’s inventory challenges in 2025. They disrupted supply chains and pushed prices higher across nearly every ingredient category.
But, instead of absorbing costs after years of doing so, restaurants searched for other answers. The top responses focused on waste reduction (42 percent), supplier diversification (39 percent), and turning to technology and AI tools (29 percent) to locate inefficiencies.
Meanwhile, the company said, efforts to increase revenue centered on marketing investments (33 percent), new promotions (33 percent), and expanding into catering and events (30 percent).
A theme from the date: find paths to drive revenue without leaning so heavily on price hikes. Although, worth noting, people did that, too (33 percent).
Greatest sources of financial strain in the past 12 months
U.S. average
- Food/inventory costs: 28 percent
- Rent: 18 percent
- Labor costs: 17 percent
L.A.
- Food/inventory costs: 38 percent
- Rent: 10 percent
- Labor costs: 14 percent
Dallas
- Food/inventory costs: 27 percent
- Rent: 8 percent
- Labor costs: 27 percent
Chicago
- Food/inventory costs: 32 percent
- Rent: 12 percent
- Labor costs: 24 percent
New York City
- Food/inventory costs: 16 percent
- Rent: 18 percent
- Labor costs: 20 percent
Miami
- Food/inventory costs: 22 percent
- Rent: 24 percent
- Labor costs: 15 percent
Houston
- Food/inventory costs: 28 percent
- Rent: 20 percent
- Labor costs: 12 percent
Austin
- Food/inventory costs: 24 percent
- Rent: 28 percent
- Labor costs: 16 percent
Top steps taken to reduce expenses
- Reducing food waste: 42 percent
- Finding new, less expensive suppliers: 39 percent
- Introducing new technology or AI tools: 29 percent
- Eliminating certain menu items or inventory: 28 percent
- Limiting promotions or specials: 24 percent
Top steps taken to increase revenue
- Investing in more marketing efforts: 33 percent
- Introducing new promotions/specials: 33 percent
- Raising menu prices: 33 percent
- Introducing new technology or AI tools: 30 percent
- Adding new sales channels: 30 percent
When asked what’s preventing them from further growth, operators returned some familiar answers: food coasts (18 percent), economic uncertainty (15 percent), rent (13 percent), and attracting new guests (13 percent).
And yet, full-service restaurants were noticeably optimistic, with 86 percent claiming to feel good about the future of their business.
TouchBistro said 2026 confidence reflects a shift in mindset. Operators now are taking control through expansion strategies that don’t require major upfront costs. They’re not simply waiting for external conditions to improve. Fifty-one percent said they plan to participate in local events like food festivals and networking opportunities. Thirty-nine percent expect to add private events. Thirty-eight percent are launching catering services.
All approaches, the company explained, are designed to leverage existing resources, such as space, staff, and setup, to generate fresh revenue.
Optimism about the future
- Optimistic: 86 percent
- Neutral: 10 percent
- Pessimistic: 4 percent
Top obstacles to business growth
U.S. average
- Food costs: 18 percent
- Economic uncertainty: 15 percent
- Rent: 13 percent
- Attracting new customers: 13 percent
Tampa
- Food costs: 19 percent
- Economic uncertainty: 14 percent
- Rent: 11 percent
- Attracting new customers: 18 percent
New York City
- Food costs: 14 percent
- Economic uncertainty: 24 percent
- Rent: 12 percent
- Attracting new customers: 12 percent
Miami
- Food costs: 12 percent
- Economic uncertainty: 16 percent
- Rent: 22 percent
- Attracting new customers: 12 percent
LA
- Food costs: 22 percent
- Economic uncertainty: 14 percent
- Rent: 8 percent
- Attracting new customers: 14 percent
Chicago
- Food costs: 30 percent
- Economic uncertainty: 4 percent
- Rent: 2 percent
- Attracting new customers: 16 percent
Dallas
- Food costs: 22 percent
- Economic uncertainty: 16 percent
- Rent: 6 percent
- Attracting new customers: 4 percent
Austin
- Food costs: 18 percent
- Economic uncertainty: 8 percent
- Rent: 22 percent
- Attracting new customers: 16 percent
Top expansion plans in the coming year
- Participate in local events: 51 percent
- Add private events: 39 percent
- Add catering services: 38 percent
Based on these results, TouchBistro suggests some small, smart adjustments.
Operators can tap into the hybrid work world by targeting deals during Monday lunch and Tuesday to Friday dinner service. They can focus on expense reduction over revenue maximization by combatting food waste and supply costs, not just passing costs onto customers.
Lastly, 2026 could be ripe for diversified revenue streams that don’t add overhead, like catering, events, and local partnerships where income can be had with existing resources.
