JBF Study: Independent Restaurants Are Actively Evolving

Independent restaurants are at a pivotal moment, as the industry confronts multiple challenges including inflation, cost volatility, and extreme weather and adapts to an increasingly complex operating environment, according to the findings of the The James Beard Foundation® (JBF) 2025 Independent Restaurant Industry Report.  The research stems from in-person chef interviews and a nationwide survey of more than 400 restaurant owners and operators spanning 47 states with respondents ranging from fine dining establishments to fast-casual venues, breweries, and caterers.

"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.”

The study identified four major trends:

• 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

Among the key findings: 

2024 Business Performance

• Business performance improved slightly in 2024, with 54 percent of respondents reporting positive results compared to 46 percent in 2023. Only 14 percent of respondents described business performance as poor/very poor, which was down from 23 percent 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 percent of restaurants did not change prices in 2024, down 19 percent from 2023, indicating a stronger shift towards strategic price increases. 
• Despite pricing adjustments, profitability remained challenging in 2024. While 28 percent of respondents reported maintaining the same profit levels as in 2023—up from 17 percent the previous year—50 percent still reported lower profits, only a slight improvement from 56 percent in 2023. This may suggest that although revenue increased, higher operating costs may continue to pressure margins. 
• Labor costs continue to rise. Notably, 92 percent of respondents reported increasing staff wages in 2024, up from 84 percent 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.

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 percent of respondents increased prices on their entire menu, 36 percent increased prices on a few items, and only 6 percent made no menu changes. Most increases were between 5 percent and 10 percent—on average a less significant increase than in 2023. 
• Restaurants feel they've reached a ceiling on raising prices, with those increasing prices by over 15 percent reporting poorer business performance, decreased profits, and fewer customers.
• Food costs were ranked as the top concern for 2025, with 76 percent of respondents identifying increasing food costs as the primary trend affecting the industry.
• Extreme weather events have become a major cost driver, with 92 percent of respondents believing it impacted their business in 2024. From Hurricanes Milton and Helene to Los Angeles wildfires, these events have disrupted operations and supply chains nationwide, with 79 percent reporting that they have led to rising general costs. 

Intentional engagement to deepen guest connection

• Dwindling foot traffic in recent years has resulted in a decline in “regulars,” making customer loyalty more elusive. The third-highest ranked customer trend in 2024 was the changing (decreased) frequency of dining out, with over 70 percent of respondents reporting fewer patrons than last year.
• To combat this, some establishments are implementing sophisticated engagement strategies that combine online and in-person experiences to foster deeper, more personalized connections with guests.
• Social media has emerged as a primary engagement tool, with nearly 75 percent of restaurants leveraging it for marketing purposes and the majority anticipating it to be the second most influential trend in 2025 after increased food costs. 
• Establishments that increased their focus on in-person engagement reported stronger business performancecompared to those who did not in 2024.

New ways to attract and retain a winning team

• Staffing continues to be a challenge, with the majority of independent restaurant owner and operator respondents citing difficulty in hiring and retaining high-quality staff as one of their top five concerns. 
• There is a fundamental shift in workforce expectations, with employees seeking both higher compensation and enhanced quality of life benefits. To meet this need, 72 percent of respondents increased wages by more than 10 percent in 2024. 
• Restaurants are also implementing innovative retention strategies. Cross-training programs (53 percent) and flexible scheduling arrangements (39 percent) have become widely adopted practices among respondents, allowing businesses to maintain staff engagement while managing rising labor costs.
• The research indicates that restaurants offering career advancement opportunities experienced 3.5 times less difficulty in retention and 1.2 times less difficulty in finding staff.

Increased urgency to evolve business models

• The number one issue in 2024 was the rise in general costs such as food, packaging, and repairs, a concern that doubled in importance year-over-year, followed by the rising cost of labor. Looking ahead to 2025, 76 percent of respondents expect these cost pressures to remain the most significant factor impacting the independent restaurant industry.
• Simple-yet-effective business solutions are no longer sufficient to maintain profitability in today's complex operating environment. As such, over 85 percent of restaurants surveyed implemented at least one non-traditional business model in 2024, testing changes such as tipping structures, staffing models, and alternative revenue streams like pop-ups, event spaces, and catering. 
• Notably, establishments that embraced change reported stronger performance metrics. Those experimenting with non-traditional staffing models indicated expectations of higher or similar profits, while those maintaining traditional approaches were more likely to anticipate lower profits.

The report is part of a newly launched “JBF Institute,” which offers tools, training, and resources to support the success of independent restaurants and industry professionals. Informed by research on key industry challenges, the JBF Institute provides a comprehensive suite of programs, events, and networking opportunities designed to address these issues and foster meaningful connections within the industry.