The holidays are here! ‘Tis the season of packed houses, cozy drink specials, and gift cards aplenty. It’s also the season for New Year’s Resolutions — 2026 is right around the corner.
Of course, it’s a new year, but we can still expect a lot of the same old challenges – high costs, high turnover, and high customer expectations. Well, we’re making a resolution right now to help you find new solutions to these old problems. So we called on our own Back of House panel of experts for some tips on how to improve your restaurant profit margin in 2026.
Our team came up with a few resolutions that you might want to add to your list before the clock runs out on 2025.
Before we get to the resolutions, let’s take a look ahead. What can restaurant owners and operators expect in 2026?
Bank of America highlights a few restaurant industry trends to look out for in the coming year:
Ultimately, Bank of America reports, consumer spending is strong going into the new year and Americans still enjoy dining out . But consumers are uncertain about the state of the economy due to factors like slowed job growth, inflation, and tariffs. These uncertainties may cause diners to tighten their spending habits in 2026.
Now that we know what we’re dealing with, let’s talk about how to improve your restaurant profit margin against this backdrop.
“The repeated cost of recruiting, hiring, and training adds up,” says Ashley. One of the best ways to improve your restaurant profit margin in 2026 is to lower your spend on labor acquisition and onboarding. But in order to do that, you have to put the proper resources into the team you have.
“Invest in your team for their own longevity,” Ashley advises. We’re starting to see some industry-wide improvements in retention rate, and one of the reasons is that restaurant owners are beginning to recognize that there is measurable value in providing generous pay, enhanced training, and career development.
Owners and operators who understand what younger employees are seeking out of their work experience (such as flexibility, benefits, and opportunities for advancement) will spend less in the long run on employee churn.
Your menu contains opportunities to improve your restaurant profit margin that you may not even be aware of. Make 2026 the year you give your menu a makeover. There are plenty of ways to improve your profit margins by pricing, presenting, and featuring items on your menu.
As you review your menu, Rachel advises, “Focus on high-margin items. Think about how you can spotlight these items on your menu. How can you make the most profitable items stand out? How can you encourage more sales on these items?”
The answer to these questions is menu engineering – a data-driven approach to optimizing your menu in a way that maximizes sales and profitability. Once you start leveraging your data to make decisions about your menu, it also becomes easier to keep things fresh.
Rachel suggests “reviewing your data and updating your menu seasonally. Not only is it a great way to keep your menu fun and interesting, but it gives you regular opportunities to see what's working and what you could be doing better.”
The digital media landscape is constantly evolving around both technology and user web habits. So even if you feel like you’ve got a good handle on your social media game, the new year is a great time to reevaluate your approach.
As you look ahead to 2026, Rachel advises that you “Take the time to update your website, make sure you’re monitoring and responding to reviews, and scan the web to make sure you’ve claimed your business listings on all the platforms that people use to find restaurants.” (These include Yelp!, TripAdvisor, and Google Maps).
Online visibility and engagement are absolutely vital during a time of increased competition. This is especially true for small businesses and independent restaurants. You may not have the same budget for marketing as the big chains, but you have access to the same platforms as well as all kinds of user-friendly social media manager tools that can help you make the most of these platforms.
“Labor dollars are continuing to go up, depending on the state,” says Spencer. This is especially true in states that will eliminate, or have already eliminated, the Tipped Minimum Wage. In states without this tip credit, restaurants are required to pay tipped employees the state minimum wage. Though the federal minimum wage is $7.25 per hour, the rate is $15 per hour or higher in many states.
Restaurants in states that eliminate the Tipped Minimum Wage will see a dramatic rise in labor costs in 2026 and beyond. And Congress is considering a bill that would eliminate this tip credit nationwide. So how can you navigate rising labor costs without sacrificing on the quality or quantity of your team members?
“Dig into your historical data and plan ahead for what's coming,” says Spencer. “Really dive into some of the minutiae of it so you can see where you can save some money on your labor cost.” When you can really pinpoint sales and traffic trends, you can reduce the costs of overstaffing and prevent the diminished customer experience caused by understaffing.
Rachel agrees, and points out that you already have access to a lot of this data through your POS system. “But when you connect this data to advanced shift scheduling solutions,” says Rachel, “you can really dial in your labor strategy. You’ll want to use these advanced forecasting tools to right-size your staffing.”
“Really look at AI functions and AI solutions,” Spencer advises, “because they're not going to go away.”
In fact, AI adoption in the restaurant industry is growing at an extremely fast pace. During a Back of House webinar in October, Spencer pointed out that 80 percent of restaurant operators expect to increase their investment in AI this year.
AI-powered tools are already helping restaurants lower costs with things like automated inventory management, demand forecasting, and staff scheduling. AI is also helping restaurants bring in more revenue with data-driven ad campaigns, loyalty programs, competitor insights, and much more.
“These tools are only going to get better,” says Spencer. “So if you’re looking for ways to improve your restaurant profit margin, really educate yourself on what AI can do for your business.”
Obviously, AI technology covers a lot of ground. The same is true for restaurant technology in general. We have no shortage of solutions to choose from.
But which of these tools makes the most sense for your restaurant? The answer really depends on what you have and what you need. We’re here to help your restaurant make sense of it all. And the best part is that you don’t have to wait until the new year to make good on this resolution.
Reach out right now and schedule your free personalized consultation today. Let’s make sure you come out of the gate swinging in 2026!