Weekly Wrap February 10: 2025 Projections, Tariffs, and More
The most important hospitality industry news right now
Dave Foss
February 10, 2025
Welcome to the first edition of the Weekly Wrap from Full Book. We’re covering restaurant projections for 2025, the impact of potential tariffs, the tip credit in Michigan, and more.
Restaurant Industry Projections
The Headline: “The restaurant industry is projected to reach $1.5 trillion in sales this year”
The Source: Nation’s Restaurant News
What You Need to Know:
The restaurant industry surpassed $1 trillion in sales for the first time ever in 2024 and that pace isn’t expected to slow down this year. In fact, the National Restaurant Association predicts it will accelerate. According to the association’s 2025 State of the Restaurant Industry report, published today, sales are projected to reach $1.1 trillion this year, marking a 4% increase. The entire foodservice industry, including lodging, bars, and schools, is expected to reach $1.5 trillion this year.
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Because of this stabilizing backdrop, more operators (80%) are optimistic that their sales will be either higher or about the same as they were in 2024.
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For value, 95% of restaurant operators said their customers are more value-conscious than they used to be, while 55% responded in 2024 by adding new discounts, deals, or promotions. Some value strategies that have gained traction in the quick-service segment, according to the report, include limited-time offers, value/combo meals, and buy-one-get-one-free deals. About 80% of consumers said they would take advantage of discounts for dining on less busy days of the week or times of day, while the same percentage said they would take advantage of a discounted add-on.
Our Take:
Optimism is high in the industry, but it’s not equally distributed across the country. Some states are still feeling the pinch of inflation and the labor crunch. Some suburban metropolitan areas are feeling the pressure of workers going back to the office, giving a much needed boost to the downtown business districts but shedding some of the gains made in the outlying areas.
We feel optimistic on the whole that spending will be up in 2025, though there is much uncertainty given the current political climate and how some policy changes may affect consumer sentiment for the better or worse.
Immigration Concerns
The Headline: “For Undocumented Restaurant Workers, Everything Is in Question”
The Source: Eater
What You Need to Know:
Though undocumented immigrants make up just 5 percent of the labor pool, they make up 16 percent of food supply chain workers, from fruit pickers to slaughterhouse workers to chefs, and these threats to undocumented immigrants are rattling the industry. Workers face the discontinuation of employment as more restaurants use the U.S. Citizenship and Immigration Services’ (USCIS) E-Verify tool to vet employment eligibility. There are threats of ICE raids and deportation, and even fewer paths to citizenship. As CNN reports, managers are advising restaurant workers in Chicago to carry their work permits and any other documentation. In New York, Seaport Entertainment Group surprised workers at the Tin Building with mandatory background checks just prior to the inauguration, discontinuing the employment of many undocumented kitchen and custodial staff.
Part of the issue immigrant restaurant workers face as they attempt to stay and work in the U.S. is the great backlog of immigration paperwork. Though the USCIS says it has made progress, there were 10.9 million applications for naturalization, visas, and employment authorizations in the fiscal year 2023. And the department still appears to be feeling the effects of a 2020 hiring freeze, meaning there are fewer officers able to conduct interviews.
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To be “documented” in America does not mean just one thing. Many workers have work authorizations, or visas that have expired only because USCIS hasn’t gotten around to renewing them. And the constant worry over what counts, what doesn’t, and what might change takes a mental toll.
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This atmosphere of fear will have direct consequences on restaurants and food stores. “How do I explain to guests that it’s costing more to get lettuce because there’s no one to pick it?” says Gomez. But more importantly, these raids threaten millions of people who deserve to live with dignity and autonomy. “Every part of the restaurant, the porters, the busboys, the cooks, the prep cooks, management is affected by this. We’re not seen as humans up to a point, we’re seen as an enemy. All we want to do is feed people and feed ourselves.”
Our Take:
There is no doubt that current immigration policies are significantly impacting the labor challenges faced by restaurant owners. The key question remains: how long will this uncertainty last? Will it persist for six months, a year, or the full four-year term?
Many operators we've spoken to across multiple states remain hopeful that the current wave of enforcement will be short-lived. However, a larger concern has emerged: many long-term employees who are legal immigrants are losing faith in the system. Despite their lawful status, they fear potential deportation for themselves or their loved ones. This uncertainty is creating instability in an already fragile labor market.
Like many policy changes, only time will tell.
Tariffs
The Headline: “One-third of independent restaurants expect sales declines from tariffs”
The Source: Restaurant Dive
What You Need to Know:
One-third of independent restaurants expect sales declines if the United States imposes substantial tariffs on goods from China, Canada and Mexico, according to an Alignable survey of over 3,700 small business owners.
Comparatively, 30% of all small business owners said they expect sales to decrease following tariffs. Another 40% expect no impact to sales.
The National Restaurant Association previously said it’s taking a wait-and-see approach to potential tariffs, which are currently delayed on Mexican and Canadian goods due to negotiations. Restaurant owners are evaluating how they might be impacted and are preparing to manage pricing pressures, gather key ingredients and adjust menus if needed, the organization said.
Our Take:
In the short term, we seem to have a small reprieve or wait on potential tariffs as they were temporarily set aside by the Trump administration, though the threat still looms.
IF tariffs do go into effect, we will definitely see small operators feel the impact with the cost being passed onto the consumer almost immediately. Larger chains will have a little more leeway to absorb the impact and may take the wait-and-see approach as to adjusting their menu pricing.
Tip Credit Michigan
The Headline: “Efforts continue to save tip credit”
The Source: WNEM
What You Need to Know:
In two weeks, Michigan’s restaurant industry could see a colossal change, and many owners and workers say it will put them out of a job.
That’s why the Michigan Restaurant and Lodging Association (MRLA) is urging lawmakers to save tip credit. The House has already passed its version of legislation to address the issue, and now the MRLA hopes the Senate follows suit.
According to the MRLA, one in five restaurants will close, 40,000 to 60,000 employees - most of them servers - will lose their jobs, and most restaurants will raise prices by at least 25%.
“This could be worse for the industry than COVID was,” said John McNamara, the vice president of government affairs for the MRLA.
He was talking about the loss of Michigan’s tip credit that is scheduled to be reduced and eventually eliminated beginning Feb. 21.
As of now, the tip credit will gradually be phased out over the span of five years unless state lawmakers take action. Instead of getting a tip credit, servers would eventually be paid the full minimum wage by 2030.
Our Take:
Michigan’s restaurant industry faces potential closures and job losses as the state’s tip credit is set to phase out starting Feb. 21. The MRLA warns this could shut down one in five restaurants, cut 40,000-60,000 jobs, and raise menu prices by 25%. They urge lawmakers to pass legislation preserving the tip credit, with the Senate expected to act soon. Without intervention, restaurants—especially in northern Michigan—may struggle with higher costs, staffing issues, and service changes. The minimum wage will also rise to $12.48 on Feb. 21. It’s important to note that the article itself shows a very extreme outcome. We don’t predict a 25% increase in prices nor do we think 60,000 jobs will disappear; there will be losses, but not to this extreme.
We will be keeping a close eye on this and other tip credit battles happening across the country. Some states have either never implemented or have already eliminated the tip credit, with mixed results. Many restaurateurs we’ve spoken to are choosing to invest in states that still allow the tip credit (like Texas) while avoiding those that do not (like California). They often cite a higher return on investment in states where the tip credit remains in place, influencing where they allocate their resources.
That’s not to say it’s impossible to run a profitable restaurant in states without a tip credit, but operators are adapting their business models and service styles to maintain profitability. Personally, we support the tip credit, as it helps bridge the pay disparity between front-of-house (tipped employees) and back-of-house (non-tipped employees). By allowing for wage flexibility, it enables operators to better compensate their typically underpaid back-of-house staff.