The leaks draining your restaurant margins

Restaurants are losing money in ways that aren’t always obvious—and this week, we zero in on the leaks.

From unanswered phone calls costing billions to the hidden drag of turnover and a shifting labor pool shaped by AI, operators are navigating a landscape where small inefficiencies add up fast. The through line: profitability isn’t just about driving traffic—it’s about capturing every dollar and rethinking how teams, tech and talent show up in a changing industry.

But first, some members of Congress are pushing to reverse new requirements on SBA loans which would exclude green card holders, affecting restaurants in particular.

Trend alert. Some U.S. cocktail bars are offering more transparency by listing ABV on menus.

Bottom line. Restaurant delivery startup Wonder hires CFO as it lays the groundwork for IPO.

Bottle bot. Wine lovers, beware, AI is coming for sommeliers.

Ciao for now. A longtime Austin Italian restaurant says goodbye after 27 years.

A new solution. A popular San Francisco bakery hires a “line coordinator” to deal with long lines.

Not answering phones is hurting your restaurant’s bottom line

Restaurants are missing billions in revenue by failing to answer phone calls, as understaffed teams prioritize in-store and digital orders. Missed calls often translate into lost orders, with some estimates putting the annual impact near $20 billion. Technology like automated call handling and AI ordering can help capture otherwise lost demand.

Why it matters: As off-premise dining grows, the phone remains a critical but neglected sales channel. Every unanswered call is a missed transaction and frustrated customer. Operators who ignore it risk losing revenue to competitors with better systems, while those who modernize phone ordering can unlock meaningful incremental sales without adding new traffic. (QSR Magazine)

Staff turnover is costing you

Restaurant turnover quietly drains profits through hiring costs, lost tax credits, higher unemployment taxes and operational disruption. With turnover rates often exceeding 70 percent, costs can reach thousands per employee. Solutions include offering flexible scheduling, earned wage access, and better workforce tracking to improve retention and stabilize operations.

Why it matters: Turnover isn’t just an HR issue, it’s a major financial leak that compounds across payroll, productivity and guest experience. In an industry with razor-thin margins, reducing churn directly boosts profitability, consistency and growth. Operators who invest in retention gain a competitive edge by protecting both their workforce and bottom line. (Modern Restaurant Management)

As tech layoffs continue due to AI, restaurants will see more overqualified applicants

A Boston restaurant owner observes laid-off tech workers applying for service jobs as AI disrupts white-collar employment, especially entry-level roles. Automation could hollow out traditional career paths, pushing more workers into hospitality and raising the question: could restaurants become an unexpected refuge amid widespread professional displacement?

Why it matters: If AI reshapes the labor market, restaurants may see a surge of overqualified applicants and shifting workforce dynamics. That could ease hiring in the short term but also change expectations around pay, stability and career paths—forcing operators to rethink how hospitality fits into a rapidly evolving economy. (Caper Media)

42%

The percentage of restaurants that did not turn a profit last year, according to the National Restaurant Association. (WTOP News)

Chicago mayor set to veto tipped wage freeze

Could Connecticut see a Styrofoam ban on takeout orders?

Hot take: What if we just got rid of fine dining?

Restaurant owners warn ‘no-tip’ trend is ‘degrading' dining experience

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