If every prediction for the restaurant business brought a dollar to the trade, operators could shut down Jan. 1 and still declare 2025 a gangbuster year. Apparently, anyone who so much as used a napkin during the prior 12 months is obliged by law or custom to air their expectations for the industry’s next 12.
Yet, despite what appears to be an all-time high in forecast volume, the crystal ball is about as clear as a lava lamp. Predictions are definitive statements of what’s next. Not figuring into the picture are the what-ifs, the variables that could bring either fortune or catastrophe. It all depends on how those issues unfold.
Here are some of the uncertainties that could have restaurateurs either whooping or weeping on Dec. 31, 2025.
What if inflation spikes again?
Most of the forecasts we’ve seen call for food costs to inch upward by a percentage in the low single digits. The consensus is that wages will rise at a slightly higher rate, possibly in the mid-single-digit range. If those predictions are even remotely accurate, the pressure on menu prices would be more moderate than what the industry has felt in the prior few years.
Yet there’s reason to suspect those projections could be woefully low. Our incoming president has vowed to levy 25% tariffs on all goods shipped into the U.S. from Mexico, the United States’ biggest trade partner. An avocado or Mexican beer that costs X today will set a restaurant back X + 25% if the surcharge is indeed assessed, as President-elect Trump has vowed to do on his first day in office.
Donald Trump has also pledged to levy the surcharge on imports from Canada, a major source of red meat, flour and other grain products. Those supplies would similarly jump in price.
What’s often forgotten in the spirited discussion of the tariff proposal is the impact on the price of domestically produced goods. American suppliers will have the cover to raise prices by up to 24% and still undercut what importers charge.
Yet no issue is likely to be more important to restaurants in 2025 than allaying the sticker shock that walloped the business this year. There’s no denying at this point that consumers are forgoing restaurant visits and cooking more often at home because menu prices are soaring past the level of everyday affordability.
The industry is going to have a very bad year if it can’t keep its everyday patrons and win back the ones adopting a lifestyle where dining out is a special treat.
What if immigration reform dries up the labor pool?
It’s a no-brainer that the mass deportation of undocumented migrants would make the recruitment and retention of restaurant workers that much tougher. The question is, by how much?
The latest indication from Trump’s transition team is that the new administration will seek to send at least 2 million immigrants back to their nations of origin. That’s a big number. Some extremists say the tally of deportees could top 10 million, though logistical considerations suggest that scale would be unrealistic.
Less discussed in the restaurant business is the possible effect on the industry’s supply chain. Will there be enough farm workers to cultivate and pick what’s grown on American farms? About half the 162,000 workers on California’s farms, a main source of vegetables and fruits for the industry, are undocumented, according to the University of California at Merced.
How about the factory workers who process the goods? And the truck drivers who haul the supplies to an establishment’s backdoor?
Any crimp in supplies is likely to raise prices.
What if other areas copy California’s wage-setting model?
Organized labor scored an historic victory this year when the minimum wage for most fast-food workers in California jumped 25% to $20 an hour as of April 1.
The near-vertical increase was the result of a new wage-setting process that’s a first of its kind for the restaurant business. Instead of having elected officials set the minimum wage, California is entrusting that responsibility to a panel of fast-food workers and restaurant employers. The idea is they’ll collaboratively hammer out a rate that works for both major shareholder camps.
No longer will pay levels be set unilaterally by fast-food employers, a prerogative they and other payroll managers have enjoyed since Adam and Eve needed to hire a mover.
Labor advocates have been pushing other jurisdictions here and there to follow California’s lead and set up their own employment councils. Their objective is empowering employees to strongly influence what they’re paid.
In recent weeks, Minneapolis’ City Council voted to give that model a try, albeit for workforces beyond the restaurant business. Mayor Jacob Frey vetoed it, and the Council failed to override his veto.
But labor advocates are already shifting their hopes of forming labor councils to Baltimore and other parts of Maryland. It remains to be seen how much traction they’ll get, and where they may focus next.
What if the industry whiffs on childcare?
The industry would be braindead if it didn’t appreciate the impact affordable childcare would have on its recruitment struggles. Parents could take a restaurant job without worrying about who’ll watch the kids or how they could afford a service that costs more than what they’d earn.
An affordable option has been employers’ Holy Grail. Never before has the quest been as close to succeeding as it is right now in Texas, where the Texas Restaurant Association is leading a consortium of companies that share the trade’s recruitment plight.
The group intends to present state lawmakers and regulators with concrete ways in 2025 of bringing the service within financial reach of employer and employee. The suggestions range from lowering providers’ costs by rolling back costly and ineffective regulations, to creating resource centers where employers can share what’s worked for them.
The consortium, known as Employees for Childcare, or E4C, is open to sharing its remedies with any party that’s interested, including other state restaurant associations. The more parties that take up the cause, the less each one would have to pay.
A core assumption is that the expense should be split between employer, employee and government.
It would be extremely Grinch-like to suggest the effort is the industry’s last best hope to crack the code on childcare. But it’s never had a better opportunity to make the game-changer a reality.
If the effort should fall short, employers would lose valuable time and squander the best shot they’ve had at achieving what’s long been written off as an impossibility.
What if chains continue to close units at the head-turning rates we saw in 2024?
In a word, great. No one wants to see people lose jobs or another dining option in their neighborhoods. But the industry is littered with wheezers whose plug should have been pulled long ago. The more junk that comes off the market, the better chance the worthwhile survivors have of prospering.
What if the restaurant business gets caught up in the political craziness that many expect from a second Trump administration?
This is the great unknown. If, for instance, RJK Jr. is confirmed as the federal health czar, will he badger the whole food industry, restaurants included, to dramatically cut its reliance on processed foods, the chain sector’s lifeblood?
The business saw a rash of food contaminations during the second half of 2023, from E.coli in McDonald’s onions to salmonella in cucumbers. What if the government tries to shut down the FDA or other food-safety watchdogs?
There are more questions than answers here.
But isn’t that always the case when a new calendar is hung on the wall?
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