Restaurant labor market improves, but rising costs keep pressure high

Restaurants have gotten better at filling jobs, but they have not solved the math. Recruitment and retention are back near pre-Covid levels, yet labor costs are more than 30% higher, a gap that keeps every schedule, raise and bonus under pressure.

That matters across an industry that the National Restaurant Association says is headed toward $1.5 trillion in sales in 2025 and roughly 15.9 million workers, about 200,000 more jobs than the year before. Leisure and hospitality employment reached 16,978,000 in April 2026, according to U.S. Bureau of Labor Statistics data tracked through FRED, a sign that the labor pool has largely rebuilt since the pandemic peak. But more bodies on the payroll have not made the business easier to run.

The hiring picture also looks more normal than it did during the worst labor crunch. The association said restaurant and lodging job openings averaged 835,000 a month from 2017 to 2019 and 856,000 over the past 15 months, close enough to pre-pandemic norms to suggest operators are no longer scrambling at the same fever pitch. Quits in accommodations and foodservice totaled 611,000 in March 2026 and averaged 622,000 over the past 15 months, still elevated but not at the breakneck levels that defined the crisis years.

The problem is that lower churn does not fix the margin structure. The National Restaurant Association’s 2025 Operations Data Abstract found median salaries and wages including benefits ate up 36.5% of revenue at full-service restaurants and 31.7% at limited-service restaurants in 2024. Median income before taxes was just 2.8% at full-service restaurants and 4% at limited-service restaurants, both still below 2019 levels. In other words, restaurants are spending more to keep people, but not earning enough to make that spend feel comfortable.

That is why benefits have become part of the labor fight, not a side perk. Arthur J. Gallagher & Co.’s 2024 survey of 132 hospitality and restaurant organizations found healthcare, flexible compensation, connection and wage increases were top priorities, with some operators trimming financial wellbeing programs to make room. Chipotle Mexican Grill offered a sharper example of the new arms race on January 24, 2024, saying it was hiring 19,000 additional workers for burrito season and that more than 73% of its restaurant employees were Gen Z. Its package included a student-loan retirement match up to 4% of salary, a financial wellness dashboard, a banking product from SoFi and Cred.ai, and six free counseling sessions through CuraLinc Healthcare.

The labor market is better than it was in the pandemic panic. The pressure inside restaurants is still real, and it shows up where it always does, in staffing levels, schedules, turnover and the thin line between enough labor and too much cost.