The 35% number
BLS + National Restaurant Association data put full-service restaurant labor costs at 35% of revenue in 2025 — up from 30% in 2019. That's the highest sustained level in 30 years. Combined with food costs averaging 30%, operators are running on 8–12% margins before rent.
Why labor went up
- Federal minimum wage stuck at $7.25 but 30 states raised theirs above $10
- California $20/hr fast-food minimum (AB 1228)
- Tipped wage credit eliminations in WA, OR, NV, MN
- Healthcare costs up 8% YoY for restaurant workers
- 2021 labor shortage drove a permanent +15% wage reset
How operators are responding
Most operators have raised prices ~12% cumulatively 2022–2025 to absorb costs. Order automation (QR code menus, kiosks at ~22% of QSRs), reduced staff hours during slow periods, and consolidation of management roles are all up.