While restaurants across all categories have struggled with labor and supply chain costs since the pandemic, inflation for restaurants has fallen significantly since a peak in April 2022, according to a recent restaurant report published by Square.

The point-of-sale system company released a quarterly restaurant report, noting that inflation for the quarter fell to 4.3% at full-service restaurants and 3.6% at quick-service restaurants as of September.

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Given the category’s overall financial difficulties, it’s no surprise that full-service restaurants are experiencing fewer delays. In fact, since the beginning of the year, inflation in full-service restaurants has been on an upward trend, while inflation in the quick-service category has been falling steadily.

“Despite the decline in inflation, restaurants continue to face a number of challenges to their operations, such as fluctuations in food prices, employee retention or increases in payroll costs,” Ming Tai-Huh, Square’s director of food and beverage, said in a statement. . “Many restaurants are grappling with how to balance these rising expenses while still offering affordability to customers, and we have seen some restaurants turn to automation and other time-saving technologies to keep their margins in check.”

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Labor costs are also fueling inflation trends for full-service restaurants. According to Square’s data, wages for full-service workers have increased by 73.9% in the last seven years, while the rate for quick-service restaurants has increased by 60.2%.

“In some segments, labor costs are rising faster than revenues, squeezing margins in an already tight industry,” Ara Kharazian, Square research leader and lead developer of the Square Payroll Index, said in a statement. “This trend will likely continue. Restaurants are hesitant to raise their prices to consumers, but we remain in a pretty hot labor market, so wage increases will have to come from somewhere if restaurants want to stay competitive.”

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