Financial Pressures Force Restaurants to Reshape

Restaurants are being reshaped due to a combination of financial challenges including rising costs and supply-chain disruptions, according to SilverChef’s 2026 Hospitality Operator Report.

Among the key findings:

• Over two-thirds (68 percent) of U.S. operators raised menu prices in the past 12 months

• Nearly one in three (30 percent) plan to do so again

• About one in four (27 percent) said they can’t afford to upgrade their equipment

• The typical U.S. operator saw a median cost increase of 7.5 percent, consistent across every type of establishment

• Operators saw the steepest cost increases in food and beverage supply (66 percent), labor and wages (35 percent), and utilities (35 percent).

Sixty-six percent of U.S. operators named food and beverage among the costs that rose most over the past year, well ahead of labor and utilities at 35 percent each.

“The operators handling it best reprice surgically,” said Jon Jacobs, SilverChef’s President – US Operations. “They adjust the few dishes carrying the most exposure, rework portions or garnish on the rest, and lean into ingredients that have eased.”

The U.S. cattle herd is the smallest it has been in decades, and USDA data shows retail beef prices were up 9.4 percent year over year in July, with a full-year increase of close to 10 percent forecast for 2026. So burgers, steaks, braises and anything built around shaved or ground beef are where operators feel it most, and where menu prices have had to move, he added.

Fresh tomatoes (up 12.8 percent) and chocolate-heavy desserts are close behind, and coffee and tea have pushed beverage costs up faster than their long-run average, while eggs are down from a year ago, which makes brunch one of the few places on the menu with a little breathing room right now.

Where tariffs still bite is inside the kitchen, because metal tariffs of up to 50 percent remain in place and steel, aluminum and copper are what commercial kitchen equipment is made of, the report found.

What best practices should operators put in place now as they prepare for 2027?

“Protect the guest experience first,” advises Jacobs. “When costs rise, the temptation is to trim what guests notice most, like portion sizes, floor staffing or the quality of a signature dish, and those are usually the last places to cut.”

Meet guests where they are right now, he added. For some restaurants that means a smaller-plate option for diners watching their spend. For others, it is a family-style holiday package or a weeknight menu that gives regulars a reason to come in on a Tuesday.

Building flexibility into your cash flow is another recommendation.

“Know which costs you can adjust month to month and which ones lock you in. Equipment is a good example, since large upfront purchases tie up cash an operator may need for payroll or inventory. In our report, 86 percent of U.S. operators say the ability to change or upgrade equipment at any time, without a large upfront cost, would help their kitchens run more smoothly, rising to 90 percent among full-service and casual dining operators.”

And finally, Jacobs suggests operators should talk to guests in person. Email surveys have their place, but the most useful feedback tends to come from walking the dining room and asking a table one specific question, such as what almost kept them from coming in tonight, or what would bring them back sooner.

“Guests say things face to face that they would never put in a form, and those conversations are the most direct line an operator has to what the community actually wants.”

Sixty-eight percent of U.S. operators raised menu prices in the past year, but 38 percent say they do not plan to raise them again in the next 12 months, the report found. Only 30 percent plan another round, while nearly a third of operators (31 percent) name declining consumer spending as a top threat for the coming year.

“There is a ceiling, and a lot of operators already sense it,” Jacobs said. “Diners signal where the edge is through how they behave long before they complain. They still go out, but they are more deliberate about where and how often, and they trade down within the visit by skipping the appetizer or ordering one drink instead of two.”

Most operators raise prices reluctantly and as a last resort, because the alternatives are cutting hours, cutting staff or cutting quality, he added.

“Keeping prices sustainable is what keeps local people employed and neighborhood businesses open. Many operators are choosing to absorb costs through tighter purchasing, smarter scheduling and more efficient equipment rather than test their guests’ patience.

Many operators are caught between those two realities, when it comes to equipment, the report found. One in three delayed a planned equipment upgrade in the past year because of cost, and another 10 percent cancelled one outright. With 56 percent describing their cash buffer as limited and another 14 percent running thin or with nothing at all, a surprise repair bill can become a cash-flow problem very quickly.

“Deferred maintenance compounds,” said Jacobs. “A worn door gasket on a reach-in cooler turns into a compressor working overtime, and a compressor working overtime turns into a service call, then a replacement.”

The typical U.S. operator already spends a median of $22,500 a year on equipment maintenance and repair, the report found and operators who put it off usually end up spending that money anyway, just later and often at emergency rates, he added.

“The bigger risk is timing, because equipment rarely fails on a quiet afternoon. When a walk-in goes down on a Friday night, you lose the inventory inside it, you lose covers, and you may lose the guest who came in for a dish you suddenly cannot make.”

Despite all these challenges, 87 percent of U.S. operators are optimistic about the year ahead, the data found. That confidence rests on something real, since nearly two-thirds (64 percent) say their profit margins improved over the past year, Jacobs pointed out.

“Operators have been through a pandemic, an inflation spike and a tariff cycle in quick succession, and the ones still standing have rebuilt their businesses to flex. They buy differently, schedule differently and know their numbers far better than they did five years ago.”

And, there is something that never shows up in a spreadsheet: people still want to gather, and restaurants remain one of the easiest places to do it, Jacobs noted.

“We are heading into the holiday stretch, when office parties, family dinners and reunions with old friends fill dining rooms, and operators feel that pull. It is telling that caterers, whose business is built around exactly those moments, are the most optimistic group in our data at 96 percent.”

The report was developed in partnership with Leger and surveyed 600 American foodservice and hospitality operators to determine the top financial strains impacting their businesses today, and their outlook for the year ahead.