Texas restaurants are breaking even — or worse

Half of Texas restaurant operators did not make a profit in 2025, according to reporting based on National Restaurant Association data, which means one bad month is no longer the problem for many places — the whole year was. The squeeze is simple arithmetic: ingredients cost more, payroll costs more, and every card tap takes a cut before the restaurant keeps what is left. Texas Restaurant Association official Kelsey Erickson Streufert told public radio that costs are hitting restaurants on both sides of the math equation. This is happening in a huge state industry. The Texas Restaurant Association says Texas has more than 57,000 restaurant locations, generates about $138 billion in sales, and employs more than 1.4 million people. By late 2025, 88% of Texas restaurants said food costs were higher, 66% said labor costs were higher, and 52% said customer traffic had fallen, according to the Texas Restaurant Association’s third-quarter economics report. That is the nightmare combination for a low-margin business: your bills rise while fewer people walk through the door. National data points the same way. In the National Restaurant Association’s 2026 industry report, food costs were up 38% from 2019, labor costs were up 35% from 2019, 6 in 10 operators reported traffic declines, and 45% said they were not profitable in 2025. Restaurants have raised menu prices, but not enough to make the pressure disappear. The National Restaurant Association said full-service menu prices were up 4.6% in the year through February 2026, while limited-service prices were up 3.2%. Some ingredient shocks are especially brutal because they hit breakfast chains, bakeries, and diners all at once. The United States Department of Agriculture said food-away-from-home prices were 3.9% higher in February 2026 than a year earlier, and egg prices were one of the most volatile categories in its 2025 outlook after bird flu disruptions. Then there are card fees, which customers rarely see but owners pay on almost every sale. The Texas Restaurant Association-backed campaign for Senate Bill 2056 and House Bill 4061 said swipe fees cost Texans more than $10 billion a year, and it argued Visa and Mastercard account for more than 76% of the card-network market. Industry groups say those fees have become one of the biggest line items after food and labor. Restaurant Business reported in November 2025 that credit card processing fees were the third-largest operating expense for restaurants, behind only food and labor. That helps explain why more restaurants are pushing cash discounts, adding surcharges, or talking openly about payment costs in a way they did not a few years ago. Payments Dive reported in December 2025 that diners were increasingly seeing dual pricing and surcharges as operators tried to offset card fees. The hard part is that customers are also under pressure. The National Restaurant Association said in February 2025 that demand for dining out stayed resilient, but lower- and middle-income consumers were looking harder for value as disposable income got tighter. So the Texas restaurant story is not just about expensive eggs or higher wages or card fees by themselves. It is about a business that usually survives on thin margins getting hit by all three at the same time, in a state with 57,000-plus locations where even a small loss per check can turn a full dining room into a break-even night.