The equation is inescapable: rising wages require adjustments somewhere. According to recent industry data, 62% of restaurants have raised menu prices to offset wage increases. But pricing strategy in 2025 requires more nuance than simply raising prices across the board.
The wage picture is complex. Competition for workers has driven pay higher across all positions. Many jurisdictions have implemented or increased minimum wages. And worker expectations around compensation have permanently shifted, making pre-pandemic pay scales obsolete in many markets.
Menu pricing must balance multiple considerations. Customer sensitivity varies by segment—quick-service customers often notice small price changes, while fine dining guests may be less price-conscious. Competitor pricing creates natural constraints. And the overall value proposition must remain compelling.
Successful operators are taking strategic approaches. Some implement targeted increases on high-margin items while holding prices on value-focused offerings. Others reduce portion sizes slightly rather than raising prices. Menu engineering—optimizing the mix of items offered—allows some to improve profitability without obvious price increases.
Transparency can be an asset. Some restaurants have openly communicated their commitment to fair wages and connected pricing to worker welfare. When customers understand that their dollars support living wages for restaurant workers, many are willing to pay a premium.
Efficiency gains offer another path. Investing in kitchen equipment that reduces prep time, streamlining menus to focus on profitable items, and optimizing scheduling can all reduce labor costs per revenue dollar without reducing worker pay.
The restaurants navigating this challenge successfully share a common trait: they view pricing as a strategic decision requiring regular analysis, not a one-time adjustment. Regular menu reviews, competitor monitoring, and customer feedback all inform an evolving approach.