Technomic forecasts a 4.25% increase in restaurant revenue for 2025 – with 4% of that coming from menu price inflation.
So, as you protect yourself in 2025, you will raise your menu prices, taking price in small increments.
Because you can’t afford to let margins erode.
More Carefully and Less Often
Even with inflation currently at a more palatable 2.7%, we still have to take price – just more carefully and less often.
Chipotle, which has not taken price in over a year, just announced a 2% menu price increase.
Most people I know in the industry exist in a defensive posture.
2024 taught them how to operate in an essentially flat year and to expect another flat year to come. They know there will be some wild cards in 2025 – some could be positive (new economic policy), and some could be negative (new tariffs and immigration policy).
Still, in a restaurant, guests are the only people who pay for anything. But, in this market, none of us wants to upset even a single valued guest. Losing a guest is extremely expensive.
Before your hair catches fire in the absolute frustration of this Catch-22, remember that price increases connect to another thing I’ve been encouraging nonstop: Make your restaurants great, provide great experiences, and charge whatever you need to charge to yield the profit you expect.
Some of my clients are celebrating because they’re up almost double digits in 2024; some are down the same amount and are working hyperactively on change. Most remain in the middle.
You choose how (or whether) to meet your guests’ needs. Remember, though: In a flat market, someone wins; it might as well be you.
What to Do Now
Review your history of price increases. Identify when you last took price.
Ask yourself: Over that period, how much has inflation eaten away at your margin?
To compensate, plan one or two small, incremental price increases and schedule them for 2025.
During the height of inflation, on monthly calls with the members of my group coaching program, Restaurant Owners Success Club, I polled them all about their most recent menu price increase strategies. Every month!
Then, when inflation started to decline, we stopped talking about it because it no longer qualified as emergency mode. Instead, we filled the time with something more important: employee retention.
Like Chipotle, however, some operators have not touched price in a year or more. I worked with one client who had not touched it in three years! (We corrected that.)
Plan to hold your margins next year. And if your P&L reveals that the valuable experiences that make visiting your restaurant worth it remain elusive, also address that now.
