Do restaurants make sense anymore?

Restaurant prices feel crazy high right now, which leads me to wonder whether the whole concept of restaurants is a going concern anymore.

For years, I used to write my weekly blog post (hello!) at a local coffee shop called Southeast Grind. It had cozy couches, a comfortable vibe, and it was open all night, which made it ideal for me.

And what’s more, it was reasonably priced. A veggie bagel with a side of chips and a tea was well under $10, even around the day it closed in late 2019. (Talk about dodging a bullet.)

There’s nothing like that place now in Portland. 24 hour establishments are almost nonexistent, and a cozy cafe where you can hang out all day just isn’t a thing anymore.

My amazing local bagel place does still do a great veggie bagel (shout out to Ben & Esther’s; may it last forever). But as of the time of writing, it’s $11. This is without the side of chips and without the tea. Add that in, and it’s much more.

When a quick meal is approaching the $20 mark, I don’t know about you, but I’m often inclined to just skip it. I can make a bagel at home.

It’s making me wonder: Do restaurants make sense anymore?

It’s not just bagels

My bagel place isn’t alone. The Consumer Price Index for Food Away from Home shows a doubling over the past 20 years.

Find any restaurant on Google Maps or Yelp and look at the photos of the menus. If you see any menu older than a year or two ago, you know the prices are going to be radically different, and not in a good way. Here is The Bye and Bye, another local treasure:

And it’s not just indie restaurants too. The chart below, showing the change in fast-food restaurant prices, only goes up to 2024, so feel free to extrapolate. Either way, it’s not good.

And as final data point, this recent Reddit thread where someone unearthed a Chipotle menu board from 2017 pretty much says it all.

The “event”

Obviously, we can’t talk about anything over the past few years without talking about the pandemic, which saw supply chains seize up as people tried to stay safe across the world and, you know, not die.

I think we can generally all agree that the pandemic is past us, as much as I wish more people would still mask in crowded areas. (Seriously, do people enjoy getting sick??)

Because of the end of the pandemic, the supply chains became open again. And yet, I don’t recall a single restaurant where the prices went down again afterward.

Consolidation

I don’t necessarily blame the restaurants though. Consolidation in the food industry means that most restaurants are getting their food from only a handful of companies, like Sysco. (I was certainly surprised by how many different restaurants are basically just buying the same food items from the same sources.)

These companies rode out the inflation wave and just kept it going, squeezing their purchasers. So much for the free market at work.

Those in charge

And then there’s the inflation and supply chain issues today. Do not under any circumstances equate the inflation issues of 2021-2022 with the inflation issues of 2025-2026. One was a humanitarian response to prevent mass death. Today is due to an unforced error by monomaniacal narcissists who by their actions have caused suffering and death so that they can stroke their own egos.

And meanwhile, companies are soaking up the supply chain price rises, never to lower them again.

DoorDash

And then there’s DoorDash.

Because DoorDash and other delivery companies have spent so many years artificially deflating prices for restaurants, most restaurants can’t reasonably not be on DoorDash and survive. The market expects it.

And DoorDash isn’t all funded by venture capital anymore. They need profits. So DoorDash takes a sizable cut of each order made. Which means that restaurants, already with the thinnest of margins, need to raise their prices to compensate.

Less alcohol

With people doing more delivery and less dining in, impulse purchases and extra orders are significantly less likely. Moreover, for restaurants that serve alcohol. there’s a lot less of that. And since the price of alcohol has always been so exorbitant, this is a profit center that might even have once covered the lower margins of the food itself.

This means that restaurants have to raise prices on their food to compensate.

You can argue about whether or not that people drinking less is a bad thing, but it is what many restaurants have used to remain profitable in the past.

What about wages?

Many, specifically on the left, have been agitating for better wages in the lower-wage working sectors for years now. See the push for $15 minimum wage, which, by the time we get it all over, won’t nearly be enough anymore.

I’ve heard some argue that wage growth that is responsible for the unaffordability of restaurants today. And while it’s certainly true that wages have risen, calling this an issue doesn’t quite fly with me. This is because of the simple fact that if a business can’t survive when paying its workers a livable (or legal) wage, then that business doesn’t deserve to be in business. It’s as simple as that.

And maybe that means that many restaurants don’t make sense anymore.

Will restaurants survive?

Many of us, myself included, love a good restaurant, and love the ability to enjoy food that we haven’t prepared ourselves.

But with inflation affecting every part of our financial lives, it’s becoming less rational to spend our meager resources on a night out (or in). The price compared the enjoyment doesn’t make as much sense.

• Ultimately, I expect that upscale restaurants will continue to thrive, as the people who go there are less price sensitive, and can weather increases.
• I expect a lot of other restaurants to markedly decline in quality, either in food or in staffing, in order to thread the needle and remain profitable. I expect worse food and worse experiences.
• And a lot of restaurants are just going to go out of business.

Will it always be like this? Hard to say. I think the geopolitical situation is a big wild card. Also, as long as private equity is allowed to buy up restaurants and supply companies and bleed them dry for profits—have you been to Panera recently?—I don’t see things changing much.

What is certain is that restaurants are going to be much more expensive for the foreseeable future, unless something big changes. Better stock up on bagels.