Survey Shows AI Users in Restaurant Sector Report Reduced Food and Labor Costs

Restaurant365 has released its 2026 State of the Restaurant Industry Mid-Year Report, highlighting what it terms the Restaurant Profitability Gap—a measurable difference in business performance between restaurants using artificial intelligence (AI) to inform operational decisions and those that have not adopted AI. The report is based on survey responses from more than 420 restaurant operators representing nearly 10,000 U.S. restaurant locations across quick-service, fast casual, casual dining, fine dining, pizza, and coffee segments.

Operators using AI report stronger results in key profitability areas, including food costs, labor costs, and operational efficiency. Sixty-two percent of operators have implemented or plan to implement AI in at least one back-office function, more than double the level reported at the beginning of the year. Reporting and analytics lead AI adoption, followed by scheduling and inventory forecasting.

Among operators actively using AI, 61% report reduced food costs, 62% report reduced labor costs, and 88% report saving time every week. Nearly one-third of these operators report cost reductions of 6% or more. The data indicates that restaurants using AI-assisted forecasting, scheduling, and cost management are better positioned to convert improving guest traffic into stronger profitability.

For operators not yet adopting AI, the main barriers are data privacy and security concerns (37%), confidence in the accuracy of the output (34%), implementation costs (29%), and uncertainty about where to begin (18%).

The report also addresses broader industry conditions. While cost pressures remain, operators are becoming more optimistic about the second half of 2026. Eighty-three percent of operators reported food cost increases during the first half of the year, and 75% experienced higher labor costs. However, only 59% expect labor costs to continue rising through year-end, the lowest figure in three years of Restaurant365 research and an improvement from the beginning of the year.

Reliance on menu price increases to protect margins is decreasing, with 52% of operators increasing menu prices in response to food inflation, down from 66% at the start of the year. More restaurants are turning to inventory management, waste reduction, and supplier optimization. Guest traffic has also increased, with 46% of operators reporting increased traffic at mid-year, up from 28% at the beginning of 2026. Sixty-two percent now expect traffic growth during the second half of the year.

Employee recruitment and retention remain significant challenges for the industry. Bureau of Labor Statistics data shows restaurant turnover at approximately 74% as of March 2026. Black Box Intelligence reports a seven percentage point year-over-year decline in non-management turnover in limited-service restaurants in the first quarter of 2026. For the first time in Restaurant365’s research, better training programs have overtaken pay increases as the most frequently cited employee retention strategy.

Restaurant365’s report is available at restaurant365.com.