Protecting restaurant profit in a cost storm

Margins are tightening, guests are changing and every decision feels heavier in 2026. This week, we tackle a few pressures shaping the industry right now: the ongoing profit squeeze and the subtle ways restaurants may be diluting the guest experience. From rising costs to over-scripted service, the message is clear: protect profitability without sacrificing hospitality. In a volatile environment, sharper operations and more authentic dining moments may be the real competitive edge.

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The great restaurant margin squeeze of 2026

Inflation has squeezed restaurant margins across food, labor and operating costs in 2026, forcing operators to grapple with rising prices while consumer demand remains uncertain. Restaurants are exploring pricing strategies, portion adjustments and operational efficiencies to protect profitability without alienating guests.

Why it matters: For restaurant owners, margin compression is one of the biggest ongoing challenges—and directly affects pricing, staffing, menu design and profitability. Understanding where costs are rising most and experimenting with strategic pricing, waste reduction and operational adjustments can help maintain margins while preserving guest value. Proactive planning is key in a volatile cost environment. (Modern Restaurant Management)

It’s time to retire the restaurant monologue

Overly scripted restaurant monologues and dish explanations are diluting the magic of dining. While personal, meaningful stories can enrich a meal, rote spiels risk patronizing guests and stripping dishes of mystery. The piece advocates for authentic, sensory engagement over rote narration.

Why it matters: For restaurant owners, this highlights a balance between storytelling and guest experience. Over-explaining dishes can slow service and diminish discovery. Training staff to share genuine, concise insights—rather than scripted anecdotes—can enhance hospitality, deepen emotional connections and preserve the wonder and personal interpretation that make dining memorable. (The Washington Post)

The impact of tariffs on American wine sales and production

American wines have disappeared from shelves abroad almost entirely thanks to President Trump’s tariffs. On Friday, the Supreme Court invalidated most of the sweeping emergency tariffs—including those on imported wine and food—ruling that he exceeded his authority under the International Emergency Economic Powers Act. The 6–3 decision halts billions in duties, affects $150 billion+ in import taxes already collected, and could lead to refund litigation for importers hit hard by the levies.

Why it matters: For restaurant owners, tariff relief could ease inflationary pressure on imported wines, spirits, cheeses and other specialty ingredients that were costlier under steep duties. If refunds materialize and future levies are more targeted, operators may regain pricing stability and menu diversity. However, lingering trade uncertainty and alternative tariff threats mean planning must remain flexible. (The New York Times)

35%

The amount that food and labor costs rose from 2019 to 2025. (Nation’s Restaurant News)

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The Prep is written by Kelly Dobkin and edited by Bianca Prieto