This article is part of "Made to Order," a series highlighting the business strategies driving today's food industry.
"A perfect storm."
"Death by a thousand paper cuts."
"Getting punched in the face and then, just before you've gotten back up, getting punched again."
This is how restaurant owners and chefs described the state of the industry to Business Insider.
Still reeling from the effects of the COVID-19 pandemic, the fine-dining scene has been hit with the skyrocketing costs of goods, labor shortages, and potential tariffs. Reservations are down, and even a Michelin star or two can't protect you from the stress.
"If you saw pictures of me now compared to five years ago, I look like my son five years ago," joked restaurateur Francesco Zimone.
Still, this story isn't all doom and gloom.
The restaurant industry has always been resilient, and chefs said they're finding new ways to stay relevant by building lively atmospheres, special events, and sometimes, ditching their tasting menus entirely. When wallets are tight, the atmosphere needs to feel worth the extra price.
A crisis unlike any other
Opening a restaurant has never been an easy feat, even during the best of times. Zimone opened his new restaurant, Florence Osteria & Piano Bar, in a Los Angeles space where four restaurants had closed in the last 10 years.
The industry has weathered stock market crashes, natural disasters, and the Great Recession. But nothing could prepare restaurateurs and chefs for the pandemic and what came after it.
Everything is really expensive. When did vegetables become like caviar?Chef Kevin Meehan"My friends in New York, LA, Chicago — they all lament the old days when there was an abundance of staff and people who were passionate about our industry, where consumers were open to anything and dining at all hours," said chef Paul Bartolotta, who runs 17 restaurants under his eponymous restaurant group in Milwaukee. "We haven't done an autopsy on the restaurant industry post-COVID, but it's certainly a very different reality."
According to the National Restaurant Association, the average restaurant has seen a 35% increase in both food and labor costs since 2020. The cost to eat out went up with them, with average menu prices rising by 31% between February 2020 to April 2025.
Amid fears of rising inflation or an impending full-blown recession, Americans are tightening their budgets. The vibecession is back, and chefs are seeing fewer reservations across the board, whether you're a mom-and-pop shop or a Michelin-star restaurant.
Restaurants are also seeing a drop in tourists as Canada, China, and nations across Europe have updated their travel guidance to the US amid President Donald Trump's policies. Since January, Los Angeles chef Michael Cimarusti has seen a 20% drop in foreign travelers, which he said typically made up 40% of reservations at his two-star Michelin restaurant, Providence.
When you subtract customers but add the rising cost of goods, that equals a double whammy of issues.
"There was a point in my career not long ago when I'd go to the farmers market and buy anything I wanted," recalled Kevin Meehan, who runs the LA restaurants Koast and the Michelin-starred Kali. "Now, it's brutal. Everything is really expensive. When did vegetables become like caviar?"
Ti Adelaide Martin, whose family has run the legendary New Orleans restaurant Commander's Palace since 1974, said the cost of making homemade chicken stock has gone up 300% since the pandemic.
"Every single thing that goes into it — the chicken, the vegetables, the seasoning, literally the water — every single element of it is that much more expensive," she told BI.
So is the price of milk, eggs, flour, butter, and seafood, the latter of which is Cimarusti's specialty at Providence. He recalled summers when the cost of lobster was down to $5 per pound. Now, he said, even the cheapest lobster meat can go up to $17, and the price of rockfish, black cod, and salmon has also doubled.
"The cost of doing business in the United States is very expensive," Cimarusti explained. "Fuel, insurance, crew, tackle, gear, licenses — everything. And American fishermen meet those rising costs by raising prices. They really don't have a choice. To deliver a certain level of quality costs a lot of money."
The same could be said for the world of fine dining. When guests walk through the door with specific expectations, you simply can't cut costs to offset rising prices.
"We're in the business of creating experiences, and you can't sacrifice the experience," said Giancarlo Pagani, whose celebrity hot spot Mother Wolf has locations in LA, Las Vegas, and Miami. "The biggest challenge is maintaining that experience without going under."
Fine dining with a side of fun
Experience was baked into the very concept of Lilo, a 22-seat dining experience in Carlsbad, California, that opened in April. A new $256 tasting menu might seem like a hard sell right now, but restaurateur John Resnick and chef Eric Bost are already seeing returning customers thanks to Lilo's lively twist on upscale dining.
"We think of Lilo as a celebratory restaurant," Bost told BI. "Most of the guests are celebrating something. It cannot be a place that is very quiet and reverent, and a meditation on your plate."
Diners flow in and out of Lilo's indoor and outdoor spaces as they eat 10 courses and 16 different bites, all served by the chefs. It's a dynamic dining experience for the guests and a smart business strategy for the restaurant.
"We're able to move things around to maximize the number of guests who come in, and everyone's in an energetic environment super quickly," Bost explained.
Clark Wolf, who has been consulting restaurants since 1986, said many American restaurants are finally adopting business strategies that Europe has embraced for decades.
"Americans had this very American notion that they could have a life-changing meal seven nights a week at an affordable price, and that price was always paid in part by someone else," Wolf said.
"In Europe, they're open four days a week, everybody knows how to work in the kitchen and dining room, they start the meal earlier, and they're closed the other three days so people can have a life and they can host private events where everybody can make extra money," he added.
These private events — usually in the form of special dinners hosted by visiting chefs or wineries — aren't just great for additional profit. They bring in new customers while still keeping things interesting for the regulars.
"Regardless of whether we're in an economic downturn or not, as a restaurant, you have to constantly be evolving," said Cimarusti, who is hosting several celebrity-chef dinners to celebrate Providence's 20th anniversary this year.
"We have guests who have been to the restaurant over 250 times in 20 years," he added. "You have to have something fresh for them."
Hosting special dinners has also been a boon for Bartolotta's restaurants, especially during the quieter weeknights and chilly winter months. Typically ranging in price from $90 to $250 per person, the dinners have attracted a younger clientele and led to a whole new customer base for The Bartolotta Restaurants' rewards program, which offers special promotions and discounts.
"It's incredible how many people we've signed up because they want to know when the next wine dinner is," Bartolotta said, adding that the program has "north of 70,000 active members."
Martin found similar success at Commander's Palace after her team encouraged her to create a tasting menu inspired by Taylor Swift when she brought her Eras Tour to New Orleans in October 2024. The menu featured dishes from the restaurant's famous past chefs, including Emeril Lagasse.
"It went insane," Martin recalled. "We've never sold more tasting menus."
Restaurateur Zimone is also offering a new $50 three-course tasting menu at Florence Osteria & Piano Bar, which he opened in December 2024. Zimone said he hopes to attract new customers after his business dropped 70% during the LA wildfires.
Embrace the steak
While some restaurants are tweaking their tasting menus — a common offering at Michelin-starred eateries — others aren't afraid to ditch them entirely for fresh concepts.
"The writing was on the wall; not everyone can afford dry-aged duck with cherry glaze," Meehan told BI. "The dining room went from being half full, and then one day it looked to me like it was half empty."
With 15 years still on the lease, Meehan pivoted the concept of Kali, his one-star Michelin restaurant, into a neighborhood steakhouse. He said a breaking point was when the Dodgers were in the MLB playoffs last year.
"It was the most entertaining World Series ever, so every night for about a month we were dead," Meehan recalled. "We should show the Dodgers game, but we can't do that because we're a fancy Michelin-star restaurant."
The new Kali, which is still being revamped, will have a TV.
"I wanted something a little more casual," he added. "I wanted people to be in the dining room, talking loud and celebrating."
If the Dodgers do well again this year, Meehan plans to give out free "Ohtani dogs" with wagyu beef, furikake, and miso mustard. The pared-back menu will also feature steaks, classic sides (shrimp cocktails, wedge salads, potatoes), and martinis that Meehan hopes are the coldest in the city.
Wolf, the restaurant consultant, said we'll likely see this re-embracing of classic dishes and concepts across the country.
"When things are great, we'll try anything. When things are tough, it's tried and true," he said. "The muscle comes out — darker wood, heavy linens, a slab of beef. It just makes us feel like we're getting our money's worth and that we're going to survive."
While Wolf expects to see past recession indicators in the dining industry — like a shift back to classic French restaurants, historically beloved and already multiplying again in NYC — he thinks the atmosphere of fine dining will continue to evolve.
"The basis of the vibe changes with the culture," he said. "Right now, being snotty to people is not the vibe, which it once was. Now, it's warm and welcoming; the true luxury of really good food from really good ingredients."
A new audience
Martin has also tried to embrace new frontiers to help the 131-year-old Commander's Palace. She admitted that she was initially "snobby" about putting the restaurant on Goldbelly, which ships food from iconic restaurants and chefs nationwide, but "got religion really quick."
"That's a really serious business for us," she said. "Who knew they wanted quail and turtle soup all over the country, but they do!"
Martin also turned the accountant's office next door to the restaurant into Le Petit Bleu, a café and market where customers can buy everything from cookbooks to "an amazing roux spoon." She said that Goldbelly and Le Petit Bleu now account for 20% of the restaurant's profit.
No matter what's happening with the economy, there will always be birthdays, anniversaries, and people who just love a great restaurant — even if there are fewer of them.
"The reason I became a chef in the first place is because of the magical experiences I had as a kid, eating in restaurants with my parents," Cimarusti said.
"There's still a great number of people out there who want to experience restaurants, and I believe there always will be," he added. "That's one of the things that keeps our tables full."
