Restaurants shift from raising prices to cutting costs
Add Axios as your preferred source to
see more of our stories on Google.
Illustration: Sarah Grillo/Axios
Many independent restaurants say they've hit a pricing ceiling — even as sales and traffic stabilize, according to the James Beard Foundation's annual industry report.
Why it matters: Survival tactics of the past few years — higher prices and delivery expansion — are losing effectiveness, leading operators to reset the math.
That rings true for Ohio restaurants, many of which are operating on increasingly thin margins.
- "We ask people to be thoughtful about their reactions to the prices they see in restaurants," says John Barker, president and CEO of the Ohio Restaurant & Hospitality Alliance.
- "It's not price gouging. They're trying to survive."
Between the lines: Restaurants that raised prices more than 10% in 2025 were most likely to report lower profits — down from a 15% threshold in last year's report.
- "There's just not a lot of elasticity left," Anne McBride, VP of impact at the James Beard Foundation, the nonprofit behind the James Beard Awards, told Axios.
Zoom out: Even as pricing power weakens, most operators say business conditions improved in 2025. A majority reported good or excellent business performance and optimism about 2026.
Yes, but: Cost pressures persist. Labor remains a top concern, with 49% reporting staffing insufficiency.
- The share of operators raising wages 10% or more plunged from 71% to 15% in one year, and 18% didn't raise wages at all.
Delivery isn't providing relief either. Nearly half of operators who added online ordering and delivery reported lower profits.
The intrigue: The rise of nonalcoholic beverages was the top consumer trend cited in the report.
- Alcohol has historically helped offset tight food margins — and when diners drink less, "you don't make up the whole revenue," McBride said.
- Operators also report early effects from GLP-1 weight-loss drugs, with some diners eating and drinking less overall.
Independent restaurants aren't in crisis mode — but the easy fixes are gone, and operators are shifting from price hikes to squeezing efficiency from thin margins.
- "We can fix the problem if we know what it is," McBride said, describing operators' push for predictability amid volatile costs.
The bottom line: In 2026, stability depends less on charging more — and more on running smarter.
Prices depend on products
For Ohio restaurants, costs, margins and customer behavior vary drastically.
What they're saying: "Dairy, which is extraordinarily important for pizza restaurants because of cheese, is not one of the items that has gone through explosive increases," Barker tells Axios.
- "But if you're serving beef, it's at the highest prices in modern history."
Case in point: Kyle Schmidt, CEO of Schmidt's Sausage Haus, says the German restaurant is fortunate to have a pork-focused menu, but he's had to get creative with items that include beef.
- He's leaned heavily on longstanding relationships with distributors to lock in prices for menu items like Reuben or Wiener schnitzel, and has even explored making them with other, more affordable cuts of beef.
- For now, he's choosing to "eat some of that cost" as long as he can.
Increasing prices is "the last thing we want to do," Schmidt says.
- "That's the easy thing to do … but there's a breaking point. When is the guest going to decide that's too much?"
Friction point: That's the calculus for many Ohio restaurateurs, and finding the sweet spot is proving more challenging than ever.
- "Independent restaurants tend to be pretty scrappy," Barker says. "They've done things like bundling meals, having specials, and you see it on their menus. Independents are really creative, and we admire that."