Alison McLean
Audio By Carbonatix
The Texas Restaurant Association’s (TRA) latest economic report isn’t great news for the hospitality industry, which is the last thing any bar or restaurant owner wants to hear right now. The TRA advocates for the $138 billion statewide restaurant industry through its membership program, lobbying efforts, guidance on a slew of issues and overall support.
On Thursday evening, Emily Williams Knight, president and CEO of the TRA, sent an email out that started with a rather blunt warning:
“Unfortunately, I have to sound the alarm a bit. Our data, combined with reports we’re reading from Black Box Intelligence and others, suggests that the slowdown we’ve all feared has materialized. I say this not to create panic but to prepare you,” Knight wrote in the industry-wide newsletter.
She points out that a key holiday season is around the corner and now is the time to review every aspect of business with an eye on efficiency, ROI and guest experience.
We’ve heard similar rumblings from the hospitality industry recently, including, to a degree, the stunning 15% drop in visitors to the State Fair this year. People just don’t want to go out as much or have as much disposable income. And everything costs more. CNBC.com reported today, “Within the food index, prices for meat, poultry, fish and eggs surged 5.2% in the past year, while nonalcoholic beverages increased 5.3%.” Energy is up 5.1%, and natural gas is up 11.7%.
The National Restaurant Association report showed that in the last five years, food and labor costs for the average restaurant have each gone up 35%. Overall, restaurant customer traffic is still down from pre-pandemic levels. For diners, that means menu prices increased 31% between February 2020 and April 2025, according to data from the Bureau of Labor Statistics.
Black Box Intelligence
A broader look at the numbers affecting restaurants isn’t comforting either. Black Box Intelligence provides restaurant industry data through a network of financial, workforce and guest data. In September, the firm reported that “after a period that gave cause for optimism for restaurants, the weakening economy is – sadly – starting to show up in the numbers we’re seeing in our BBI Restaurant Performance Index.”
Black Box also reported that in September, year-over-year same-store sales and traffic were down for a second month, “underscoring that the economy — and restaurant performance — are losing steam in the back half of the month.”
The TRA’s data shows a spike in food and labor costs in Q3 paired with an uptick in menu prices. The TRA asked restaurant owners:
“Compared to the previous quarter, how did the following factors change for your restaurant(s)?”
- Food Costs: 48% reported that food costs increased slightly
- Labor Costs: 56% responded that labor costs increased slightly
- Sales and Revenue: 38% reported that sales and revenue were down slightly
- Menu Prices: 46% responded that menu prices stayed about the same and 50% responded that menu prices increased slightly.
- Traffic: 37% reported that traffic decreased slightly
- Profit Margin: 40% responded that the profit margin decreased slightly
- Overall Outlook: Decreased to 48 out of 100 in Q3, down from 57 in Q1 and 52 in Q2.
More Bad News and One Good Note
McKnight addresses the federal government shutdown, noting that federal employees are missing paychecks and “services our industry relies on like alcohol label approvals, economic data collection, and SBA small business loans are paused.”
However, there is a bit of good news. The Texas Workforce Commission has launched the Employer Child Care Solutions, which offers technical assistance to help businesses meet the childcare needs of their employees.
This holiday season is a great time to visit your favorite local restaurants and bars.
