The State of the Restaurant Industry in 2024: How Restaurants Are Writing Their Next Chapter

In an industry known for tight margins and operational complexity, restaurant owners are facing a pivotal moment entering 2025. Rising costs, evolving consumer preferences and technological advancement are reshaping how restaurants operate and grow. 

Through the stories of four unique operators – from an engineering-minded pizzeria founder, to a barbecue entrepreneur building a media presence, and a neighborhood restaurant scaling with intention to one of the country's largest seafood operations – we explore how restaurants are adapting and thriving in today's landscape.

The Growth Stories

For Shaz Khan, co-founder and CEO of Tono Pizzeria + Cheesesteaks in Minnesota, the journey began when his best friend, a third-generation pizza maker, proposed they open a restaurant together. Khan's background is in electrical engineering, but he saw an opportunity to apply his technical mindset to modernize operations. 

"I ended up applying my engineering mindset to this industry," Khan says. "A lot of things I was already doing in my previous line of work just lined up with where the restaurant industry was headed — mobile-first, tech-oriented, data-driven solutions."

In Tennessee, SingleTree BBQ's journey from food truck to brick-and-mortar success story demonstrates how careful menu development and strong operations can drive growth. "I thought I knew everything there was to know about restaurants and could operate one with my eyes closed," owner Charlie Eblen says of his initial food truck launch. "When you shrink all of that down into 144 square feet, it's challenging." That experience taught him valuable lessons about menu optimization and execution that would later inform his successful restaurant operation.

For Yum Kitchen, a Minneapolis-based restaurant group with four locations, growth has been deliberately paced and values-driven. 

"Our headline, if you think of three things to describe Yum, would be made from scratch, it's all about hospitality, and food is how we love people up," says owner Robbie Soskin. This mission has informed everything from their expansion strategy to their stance on technology adoption.

Michael Ungaro has grown San Pedro Fish Market from its roots as a 200-square-foot corner store into one of the largest restaurants in the country, serving nearly 2 million guests in 2023 from their main locations on the LA waterfront. Their 3,000-seat operation has become a case study in scaling while maintaining quality and adapting to modern operational challenges.

Strategic Investments for Future-Proofing

Technology

More than a quarter (26%) of operators plan to implement new technology systems this year1, a 7 percentage point increase from 2023.2 For many, the investment pays off through reduced costs, improved efficiency and better decision-making capabilities.

As these four restaurateurs look to the future, they recognize technology as a critical driver of operational efficiency and profitability. The shift goes far beyond point-of-sale systems — today's restaurant tech stack typically includes integrated solutions for inventory management, labor scheduling, customer relationship management, and data analytics.

"We've instituted technology and Toast has been a big part of that — we've been able to lower labor costs and increase profit margins and reward the employees," says Ungaro.

"Having Toast and Restaurant 365 and really streamlining things... these systems are in place and they're incredible. We're really able to see things we couldn't see before."

Tono Pizzeria's journey shows a similar progression. As CEO Shaz Khan describes, they evolved from "a little computer in the back office with a printer attached to it" to "a number of different cloud-based solutions," ultimately landing on Toast. The transition allowed them to streamline operations across multiple locations while maintaining consistent quality and service standards.

The key to success, these operators have found, isn't just implementing technology for its own sake, but strategically choosing solutions that enhance both operational efficiency and the guest experience. When properly integrated, these systems provide the data-driven insights needed to make informed decisions about everything from menu pricing to staffing levels, while freeing up staff to focus on hospitality.

Labor and Culture Investment

Recognizing the challenging labor market, operators are investing heavily in employee benefits and culture,  which has contributed to their longevity as a company. More restaurants are now offering health insurance plans (even to part-time staff), 401k matching, paid time off and other employee-centric initiatives. 

“We pay 75 or 80% of all healthcare for everybody that works 30 hours,” says Soskin. “You get a week of paid vacation after a year, two weeks after three, and three weeks after five. So you can be an hourly employee and get three weeks paid vacation.”

San Pedro Fish Market offers "401(k) benefits and everything else" as part of their employee-first culture. "Our company truly believes that we are people first, which helps in our turnover rate. It also helps when we're actually trying to bring people on, that people throughout the town know who we are."

By prioritizing employee benefits and workplace culture, these restaurants are building more resilient businesses while setting new standards for the industry as a whole.

Supply Chain and Menu Strategy

Recent Toast data shows that more operators are still struggling with cost management and supplier relationships compared to 2023, with inflation continuing to squeeze already-thin margins.

In response, supply chain management and menu engineering have been powerful strategies to combat rising costs: 37% have strategically adjusted their food supplier relationships, while 36% have implemented formal systems for tracking ingredient prices.

"Last year, we did close to 200 tons of shrimp just through the main restaurants," says Ungaro. "So one of the things that we had done a few years ago is just go direct to the shrimp manufacturers and do contract pricing." This direct-to-manufacturer approach has helped them maintain margins despite market volatility.

Their team pairs supplier relationships with menu engineering strategies: "Menu mix and really having a very balanced menu will take away from those cost increases...as long as we can be very strategic and creative in our menu mix and how we do our menus and how we price out certain items." 

Their purchasing director "does an extremely incredible job of getting information before it happens. So we could maneuver if we need to, or we could plan ahead of time with maneuvering our menu to offset what we believe is coming down the road." Effective planning and menu management have allowed them to maintain profitability while avoiding dramatic price increases that might inadvertently price out customers.

The key lesson from these operators is clear: successful cost management in today's environment requires a comprehensive strategy that combines strong supplier relationships, sophisticated menu engineering, and proactive planning. It's no longer enough to simply react to price increases — restaurants must anticipate and prepare for them.

Brand Connection and Community Building

SingleTree BBQ leverages social media and content creation to build community connection, launching a podcast featuring local restaurant owners and community members.

"The things that telling your story does is amazing," says Eblen. "Having your own show and having other people on to be able to tell their story highlights them and allows you to tell part of your journey as well." When your restaurant has a memorable brand you can keep customers coming back time and again on the strength of your marketing alone. 

For Yum Kitchen, community building happens primarily through in-person interactions. 

"Our loyalty program is to know your name and give your kid a cookie when they come to the restaurant," Soskin explains. "We tell our staff you can't give away enough food to be anything other than a positive ROI in marketing."

And, Tono Pizzeria deliberately maintains a strong dine-in presence despite delivery growth. "We try to create incentives for people to come in because part of the experience in and of itself is we have this centerpiece oven, we have this environment and this vibe," Khan says. "We have a place where people can convene and get together. We're built on the constructs of family and community."

Current Challenges and Future Outlooks

Beyond food costs, restaurants face pressures in competition, labor and regulatory compliance.

In growing markets, restaurant density creates intense competition for both customers and staff. Charlie Eblen explained: "In my particular area, one of my challenges is just the sea of restaurants we have... six restaurants opening up within five miles of my restaurant in the next three months. We've gone from a little town that nobody's ever heard of to now being the 13th fastest growing community in the country."

This increased competition has led to a shift in how restaurants view each other. 

As San Pedro Fish Market's team explained, "During COVID, the industry got hit hard... the competitiveness to beat one another turned into a joint club of making sure we all survive. And it was a really cool thing... our conversation has changed. Before it was, 'Hey, we're up 10%.' 'Oh well we're down 5%' and then figure out 30 minutes on how to shame you on that. But now it's, 'Hey man, how can we help?'"

Labor Market Evolution

Finding and retaining quality staff remains a persistent challenge, particularly for growing concepts. However, operators note that the challenge isn't just about availability — it's about adapting to changing workforce expectations. "Since Covid, the whole industry has pivoted, not only has the industry pivoted, but really the worker has pivoted," explains Greg Rinaldi, COO of San Pedro Fish Market. "They are expecting certain things from their workplace. They are expecting a different quality of life."

Successful operators are responding with comprehensive benefits packages and stronger workplace cultures. For Yum Kitchen, it means creating a sustainable model that doesn't exhaust staff or management. As Soskin notes, "When I turned 60 and we said, what are we gonna do in our next life together... if we were gonna get our life back, we actually had to figure our business strategy's pretty simple, replicate with a little less [founder involvement]."

And, the good news is that labor concerns are diminishing for many operators. A lower percentage of operators surveyed found sourcing and hiring a top pain point in 2024, dropping three percentage points.

Regulatory Challenges

All operators expressed concerns about navigating increasing regulatory requirements, particularly at the local level. 

Khan observes that independent restaurants often lack meaningful input in policy decisions: "Representation doesn't necessarily correlate to having a seat at the table... Unless you're a mover and a shaker in the form of publicity and press and sometimes even political donations, you don't necessarily have the sway and the pull that you wish you did."

Looking Forward

Despite challenges, operators remain optimistic. They see opportunities for growth while maintaining hospitality values.

Digital evolution with a human touch is emerging as a key opportunity, as operators find ways to leverage technology while maintaining personal connections. SingleTree BBQ has embraced digital storytelling in particular: "I just got over my fear of staring at a camera and talking to nobody... The things that telling your story does is amazing. It just opens up so many different avenues."

Sustainable growth models represent another promising path forward. Yum Kitchen's approach is an example of thoughtful scaling, as Soskin explains: "Our strategy was to go from two to four, not from two to three to four, because once we got to four... we forced ourselves to break the operating model and build a team." Approaches like this to sustainable growth ensure that quality and culture remain intact even as operations expand.

Community-centric business building has become increasingly important, with operators recognizing the value of collaboration over competition. SingleTree BBQ emphasizes this approach: "There's way more benefits out of collaborating versus trying to compete... There's plenty of room at the table for everybody. We just need to work together a little bit more." This shift toward community involvement and industry cooperation represents a significant change in how restaurants approach their role in the local business ecosystem.

As the restaurant industry continues to evolve, success appears to lie in finding the right balance between tradition and innovation. Whether it's SingleTree BBQ's fusion of traditional barbecue with modern marketing, Tono Pizzeria's tech-enabled operations supporting classic recipes, or Yum Kitchen's careful evolution of the neighborhood restaurant model, operators are finding ways to preserve what makes restaurants special while adapting to modern demands.

The key, as these operators demonstrate, is staying true to core values while being willing to evolve. As Robbie Soskin puts it, "I want to believe that hospitality will still make a comeback. People will figure out the balance between technology and hospitality."

2024 Survey Methodology

1To help better understand the restaurant industry, Toast conducted a blind survey of 755 restaurant decision-makers operating  16 or fewer locations in the United States  including both Toast and non-Toast customers from May 17, 2024 to June 2, 2024. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participation. Using a standard margin of error calculation, at a confidence interval of 95%, the margin of error on average is +/- 4%.

2023 Survey Methodology

2To help better understand the restaurant industry, Toast conducted a blind survey of 847 restaurant decision-makers operating less than 15 locations in the United States including both Toast and non-Toast customers from May 26, 2023 to June 20, 2023. Respondents include a mix of both full-service and quick-service restaurants. Respondents were not made aware that Toast was fielding the study. Panel providers granted incentives to restaurant respondents for participating.