⚠️ State of The Industry End of 2025: A Breaking Point for Restaurants?

Jonathan Munsell

Nov 6 • 🗣️ General Discussion

👋 Why I Wrote This

Every time a new client joins Restaurant Success Skool, I hear the same things:

“Sales are flat, but costs are through the roof.

”“We can’t keep staff longer than 3 months.

”“Traffic’s slowing down — even regulars are pulling back.”

“It feels like we’re working harder for less.”

Sound familiar?

I kept hearing these patterns over and over again — so I went deep to confirm what’s really happening across the U.S. food and beverage industry right now.

What I found?

It’s not just in your head. The challenges are real. The pressure is rising. And if 2026 mirrors 2025, this industry could face a shakeout we haven’t seen since COVID.

This post breaks it all down — what’s happening, why it’s happening, and what the top 5% are doing differently.

Let’s get into it.

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If 2026 looks anything like 2025, the U.S. food and beverage industry may be facing a mass extinction event — one we haven’t seen since COVID.

Operators are getting squeezed from all sides:

Costs are up.
Traffic is down.
Staffing is broken.
And the guests? They’re hunting for deals while spending less per visit.

Margins are vanishing, even for seasoned operators. And the hard truth? Many restaurants that survived the pandemic may not survive 2026.

Welcome to the new F&B reality.

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🩸 What’s Bleeding the Industry Right Now

📉 Traffic Collapse Behind the Scenes

More than 60% of restaurants saw fewer guests in 2024.
Guest counts have continued falling into late 2025, even as sales hit record highs on paper.
Translation: You’re making more because you’re charging more — not because you're serving more

That’s not sustainable.

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💸 Food & Labor Costs Are Crushing Margins

Food costs are still 20–30% higher than pre-pandemic, and volatile.
Wages are up 30%+, with many states pushing new minimum hikes in 2025.
Most operators report lower profitability year-over-year, despite raising prices again.
Fine dining and family dining are getting hammered the hardest.

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🔁 Turnover Is Back — And Brutal

Hourly staff turnover >100% per year.
Hiring is a black hole: it costs ~$2,300 to replace one hourly employee… and you’ll do that multiple times per position.
Quit rates climbed again in 2025 as burnt-out workers chase better pay elsewhere.

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🍻 Bars and Breweries Aren’t Safe Either

Cocktail bars are full — but drink tabs are shrinking.
Spirits sales down ~5.6% as customers trade down from premium.
Craft beer production fell 4% — the worst since COVID — even as taproom sales held the line.
Breweries are being forced to cut SKUs, kill off slow sellers, and find new revenue through food service.

🧨 What Happens If Nothing Changes?

Many operators are already operating on fumes. Profit margins are thinner than ever. Debts from the pandemic still hang overhead. And competition is heating up as new concepts flood the space chasing post-COVID dreams.

The result? We could see a mass culling of underperforming restaurants in 2026 — especially independents who can’t match chain-scale efficiency.

This isn’t a downturn. It’s a reckoning.

✅ What Survivors Are Doing Differently

Cutting fluff. Smaller menus, fewer SKUs, faster kitchens.
Getting hyper-local and experiential. Price can be matched. Experience can’t.
Investing in retention over hiring. Bonuses, benefits, culture — whatever keeps their team stable.
Leaning on automation and AI. Scheduling, inventory, marketing — anything to claw back margin.
Delivering value at every ticket size. Tiered menus, downsized portions, creative bundles.

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Final Word

There’s still demand — Americans still love dining out. But survival in 2026 will depend on ruthless efficiency, clear positioning, and a relentless focus on value.

If you’re not evolving, you’re in the crosshairs.

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🧠 Want to Beat the Trend? Join the Top 5%

Most restaurants are barely hanging on. But here’s the truth nobody’s talking about:

A small group of operators are absolutely crushing it right now.

They’re not just surviving — they’re growing. Hiring. Opening second locations. Raising prices without pushback. Why? Because they’re not playing the same game.

They’re leveraging smarter systems, better retention, tighter marketing, and clearer positioning — and they’re doing it inside Restaurant Success Skool.

✅ Stay profitable even with rising costs

✅ Attract and keep A+ staff

✅ Drive repeat traffic like clockwork

✅ Build a brand that customers and employees love

This isn’t theory — it’s battle-tested tactics working right now.

Check out the classroom, join live events and engage the community to get the most out of it.

Regards,

Jonathan

📚 Sources