Financial Pressures Force Restaurants to Reshape
Due to a combination of financial challenges including rising costs and supply-chain disruptions. 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. 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).
What best practices should operators put in place now as they prepare for 2027…
What Restaurant Operators Should Know About POS-Embedded Financing
Merchant Cash Advances (MCAs) are not like traditional loans. In the modern hospitality landscape, the point of sale (POS) system has evolved from a simple cash register into the central nervous system of the restaurant. Today, major POS platforms do far more than process orders and track inventory. They have become fully integrated financial hubs. One of the most significant developments in this space is the ability for operators to secure working capital directly through their POS dashboard with a single click. While this unprecedented access to capital can be a lifeline during equipment failures or seasonal slumps, the rise of this embedded finance should be well understood before clicking accept. Primarily, it is critical to understand that the financial product being offered is rarely a traditional loan. In most cases, it is a Merchant Cash Advance (MCA). As embedded financing becomes a standard feature in hospitality tech, operators need to clearly grasp the fundamental realities, mechanics, and cash-flow implications of MCAs. The fundamental distinction: An MCA is not a loan! The most common and dangerous misconception in business finance is equating an MCA to a bank loan. They are legally and structurally entirely different financial instruments. A traditional commercial loan involves borrowing a principal amount that is paid back over a set term with an Annual Percentage Rate (APR). It typically features a fixed monthly payment and amortizing interest, meaning you can save money by paying the loan off early…
Bielat Santore & Company – Restaurant Industry Alert
WE SELL RESTAURANTS!
Since 1978, the principals of Bielat Santore & Company, Barry Bielat and Richard Santore, have sold more restaurants and similar type properties in New Jersey than any other real estate company.
THE CHAPTER HOUSE, HOWELL TOWNSHIP, NJ
PRICE TO SELL!
A free-standing 6,507 SF restaurant and bar situated on 3.88 acres with 200 feet of highly visible Route 9 frontage is available as a turnkey hospitality asset. The property includes 110 paved parking spaces. The bar and lounge underwent a complete top-to-bottom renovation in 2022, leaving no deferred maintenance. The offering also includes a valuable New Jersey Type “C” liquor license, providing full on-site consumption and package-sales rights. Current operations generate approximately $1.35–$1.40 million in gross sales, with historical performance exceeding $2.1 million, supported by a dense and affluent local demographic.
The owner is relocating out of state and has restructured the offering by reducing the asking price by $500,000 to $1,900,000. Proposed terms include $200,000 in cash at closing, a new institutional first mortgage, and a flexible seller-held second mortgage featuring a six-month payment holiday followed by an interest-only period. This capital structure provides meaningful runway to refresh the concept and recover toward prior sales levels, while the underlying hard assets—real estate, license, and equipment—help protect the downside. Operations can begin immediately, with no construction or permitting delays.
Contact Richard Santore, 732.531.4200 for additional information.
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The True Cost of a Restaurant Renovation
What owners often overlook. Budgets often begin with contractor estimates, equipment costs, and interior improvements. For full-service restaurant owners, renovations can be an important investment in the future of their business. Updating an aging dining room, replacing kitchen equipment, or redesigning an inefficient layout may improve the guest experience and support long-term growth. However, a restaurant renovation can also create financial challenges that extend well beyond the construction budget. Unexpected expenses, temporary closures, reduced seating capacity, and financing obligations can place significant pressure on cash flow. Before beginning a major renovation, restaurant owners should carefully evaluate the financial decisions that can determine whether the project strengthens the business or creates unnecessary risk. The Construction Estimate Is Not the Entire Budget. Restaurant renovation budgets often begin with contractor estimates, equipment costs, and interior improvements. Yet additional expenses can accumulate throughout the project. Permits, architectural services, inspections, technology upgrades, furniture, installation, and unexpected repairs may substantially increase the total investment. Older restaurant properties may also require electrical, plumbing, ventilation, or accessibility improvements that were not anticipated during the initial planning process. Consider a hypothetical full-service restaurant planning a $400,000 renovation. If the owner allocates the entire amount to construction and equipment, an unexpected 15 percent increase in project costs would create an additional $60,000 expense. Without adequate reserves or available financing, the owner may be forced to delay construction, reduce the project’s scope, or use funds intended for normal operations. A realistic renovation budget should include contingency funds and sufficient liquidity to address unexpected expenses. Lost Revenue Can Be More Expensive Than Expected…
The Questions That Operators Should Ask Every Vendor
Here’s what you especially need to know from your loyalty provider. Loyalty programs used to be about points. Today, the name of the game is customer data: scale, quality, and ownership. You know the saying: “Data is the new oil.” And it’s true: Restaurants’ own personalization engines that drive incremental sales are fueled by consumer data. But if restaurants are not careful, their data could be powering something else altogether: their next competitor. It’s a story all too familiar for every restaurant that has grown dependent on third-party delivery. The marketplace, not the restaurant, owns the customer relationship and all the data about their purchasing. Sure, they sometimes share that data with the restaurant. But sharing is different from owning; only owning lets you direct the next purchase and control the economics. Every AI tool that touches your guest data is learning from it. The one taking a phone order. The one timing an offer to a lapsed guest. The one managing inventory or building the schedule. All of them get better on your data. And that’s fine… so long as you trust them to use what they learn for your benefit, not just their own. Amid this backdrop and growing pressure from investors to be “AI native,” many software companies are asserting more control and ownership over data, especially customer data, that really belongs to the restaurant that worked hard to build that relationship. At Thanx, we’re going the other direction, making it unequivocal that restaurants own their data…
Menu Price Inflation is Up, and Wages aren’t Keeping Pace
Restaurant menu prices are increasing faster than inflation. Restaurant menu price inflation continues to increase at a rate well over that of grocery stores but even more when compared with the amount of money Americans are actually earning. Food-away-from-home prices rose 3.5% year over year in September, according to federal data released on Wednesday. Limited-service restaurant prices rose 3.2%, while full-service prices rose 3.8%. That was slightly slower than the consumer price index, which spiked 0.6% month over month and was up 3.7% over the past year. But it was much faster than food-at-home prices, which were flat in the month and up 2.5% over the past year. And prices are also rising faster than customers’ ability to pay them. Hourly wages are up just 3% over the past 12 months, according to the U.S. Bureau of Labor Statistics. The combination of wages and prices effectively means that consumers’ spending power has fallen by 0.7% over the past year. The inflation data sent stocks down more than 1% on Wednesday and could mean more interest rate increases are in the future, as the U.S. Federal Reserve looks to slow down the rate of inflation. The gap in prices compared with wages helps explain weak consumer sentiment, which declined 13.6% year over year in October, according to the Survey of Consumers at the University of Michigan. It is also putting more pressure on restaurant chains that are contending with ongoing declines in customer traffic. Quick-service restaurant sales were up just 0.6% in the third quarter, according to the data firm Revenue Management Solutions. Traffic during the period declined 2.6%…
Upgrades Can Drive Revenue Without Complexity
Menu upgrades with the best ROI are the ones that feel substantial to the guest. Sauces and aiolis ranked as the most premium-feeling upgrade (48.8 percent), ahead of higher-quality cheese (45 percent) and crispy texture (38 percent). Nearly 70 percent of consumers would pay at least $1 more for a premium sauce or topping, and 39 percent would pay $2 or more. “Flavor, texture and mouthfeel are big components that drive what people fall in love with and keep coming back for,” explained Ian O’Neil, Rubix Foods, Director of Consumer Intelligence. “And fortunately, adding these things doesn’t require reworking menus or creating new items from scratch. It can be as simple as low-lift add-ons like sauces, glazes, compound butters, or cheese spreads. They are the fastest, most scalable lever to transform a core, existing menu item into a premium offer without burdening kitchen prep or increasing inventory complexity.” The research also shows most will also pay more for better protein, fresher ingredients, or a better side, as long as they can taste the difference. Options to upgrade to higher-tier proteins, like Hardee’s did with their prime rib platform on breakfast biscuits and burgers, helps operators stand out in a crowded market and capture premium price points, O’Neil noted. Crave ability doesn’t have to be overcomplicated, he said, adding that a majority of people (56 percent) find a tightly curated menu that does a few things extremely well most appealing. “People don’t fall in love with menu prices, they fall in love with menu items. When guests genuinely crave something, they are surprisingly willing to pay extra for it. This turns crave ability into one of the most powerful margin drivers an operator has.” Customization really matters to younger diners with 83 percent of 18 to 34 year olds reporting they would pay $1+ for additional customization options, compared with 73 percent of the general population…
Did You Know?
Taking a Bite Out of Restaurant Crime. “Restaurants are places where people go to slow down and enjoy a meal without watching the clock, and that’s exactly the problem. Guests are inside for an hour or more while their cars sit outside the entire time, unattended and out of sight. Smash and grab break-ins happen fast. I’ve seen footage of three guys hitting seven cars in under ten minutes in one lot.” Restaurants aren’t a special category of target. They’re part of a much wider group of businesses including malls and big-box retailers with the same blind spot — cars sit for extended periods while owners are inside and distracted, White said, adding that in two decades in physical security, he’s watched thieves go wherever the opportunity is best, no matter the industry…
Employee Tip
Restaurant Employees See Strong Career Opportunity, Satisfaction, and Lasting Value in Their Work. New research from the National Restaurant Association(Opens in a new window) finds that restaurant employees overwhelmingly see the industry as a place to build skills, advance professionally, and pursue meaningful long-term careers. In fact, among current employees working their primary job in the industry, 89% feel there’s an opportunity for career advancement and 96% are satisfied with their industry work experiences. Among current restaurant employees working their primary job in the industry, 86% say they are likely to continue working in the restaurant and foodservice industry until retirement. Ninety-one percent would recommend a restaurant job to a friend or family member…