The Texas Restaurant Association’s first-quarter 2026 economic report, highlighted by Chief Marketing Officer Tony Abroscato in Austin, lays out how higher food prices, rising fuel charges and workforce shortages are squeezing restaurants across Texas and forcing operators to change how they run their businesses.
Restaurant owners across the state are juggling bills that keep climbing while trying not to pass everything along to diners, the trade group’s report makes clear. Many say margins are getting thinner as they absorb costs that used to be passed on, and the pressure shows up in tighter budgets and day-to-day decisions on what stays on the menu.
“You know, what we’re seeing a lot of in Texas from these quarterly economic reports that we do is that food costs continue to rise,” said Texas Restaurant Association Chief Marketing Officer Tony Abroscato. He and association members point to an increase of about 35% in food costs since the pandemic, a jump that still echoes through kitchens and spreadsheets today.
The report found concrete numbers behind that strain: 77% of operators reported higher costs of goods, and 66% said suppliers have started tacking on fuel surcharges as gas prices climb. Those surcharges are not just a line item; they ripple through ordering patterns, supplier negotiations and decisions about how often to restock perishable items.
“We’re seeing that 90% of consumers start to adjust their habits based upon rising gas prices,” Abroscato said. When customers tighten spending, restaurants feel it immediately, and fuel-driven shipping costs push ingredient prices up because everything is moved by truck, increasing the baseline cost of running a kitchen.
Labor is another stubborn challenge. More than half of association members reported trouble hiring enough staff, which impacts everything from service speed to how many hours a restaurant can stay open. Those gaps create tough trade-offs between paying higher wages to attract workers and keeping menu prices within reach for regular customers.
“You know, immigration is difficult and has had an impact on the restaurant industry, the farming industry, which again, then raises prices along the way,” Abroscato said. The association connects the workforce crunch to broader supply issues, noting that fewer hands in fields and back-of-house shifts the cost curve upward for restaurants that rely on steady access to ingredients and reliable staffing.
Despite the squeeze, the report shows many Texas restaurants are choosing to pass along only part of their higher costs to customers while letting profits absorb the rest. That balancing act keeps diners coming through the door but chips away at operators’ margins and reduces the runway for growth or investment in service upgrades.
To cope, owners are trimming menus, streamlining operations and leaning on technology to cut labor demands and speed service. Some have introduced QR code ordering to reduce table turnover times and printing costs, while others pare back less popular items to simplify inventory and lower waste—small, practical moves that add up when every ingredient and labor hour matters.
These shifts are pragmatic and immediate: fewer SKUs, smarter ordering cadence and tighter portion control, alongside experimenting with pricing strategies that keep customers while nudging higher-cost items into premium categories. Operators say the goal is to protect core customer relationships and keep dining affordable, even if it means accepting slimmer profits for a spell.
As the quarter’s data makes clear, Texas restaurants are operating in a landscape of elevated input costs and shifting consumer habits, and they are adapting in real time through menu changes, tech adoption and careful cost management. The choices owners make now about staffing, sourcing and service models will shape how quickly restaurants recover their margins as market pressures evolve.
