The 2025 Wage & Labor Cost Index
Navigating Labor Cost Disparities in the Quick Serve Restaurant (QSR) Industry.png?width=500&height=500&name=2025%20Landing%20Page%20Header%20image%20(5).png "Minimum Wage and Market Wage")
Surging labor costs are impacting profitability.
On the heels of minimum wage increases nationwide, we analyzed data from 300 QSRs across the country.
We explored the variance between wages and menu prices, revealing the cost burden operators face amidst growing consumer, regulatory and operational pressures. Turns out, the disparity is striking.
Download the 2025 Index to uncover critial trends:
- Wage Compression in California: Recent minimum wage hikes have eliminated the traditional $3-4 premium operators previously used to attract talent
- Regional Disparities: West Coast wage-to-price ratios far exceed East Coast levels, signaling the rise of distinct regional operating models
- Philadelphia Paradox: Actual wages exceed the $7.25 minimum wage by 164%, highlighting market-driven increases in the nation's lowest wage floor
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Navigating the new normal of labor economics
The restaurant industry is experiencing a seismic transformation, marking the most significant shift since Ray Kroc's standardization of the QSR model in the 1950s.
The traditional model of incremental wage adjustments has given way to landmark legislative changes, led by California and New York, fundamentally altering the industry's foundations.
The market presents a complex challenge: wage acceleration is significantly outpacing menu price adjustments and broader inflationary trends, creating an unsustainable equation.
This phenomenon is particularly pronounced in markets like California and Colorado, where the interplay between regulatory mandates and market forces is reshaping operating models.
The QSR Composite Basket
The analysis employed a standard consumer price index, termed the "QSR Composite Basket," comprising of signature menu items from national QSR chains. This standardized basket methodology enables precise cross-market comparison while controlling for product consistenty variables.
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Wage & Labor Cost Index
We believe the 2025 Index will fundamentally reshape how restaurant operators approach labor strategy in an increasingly complex economic landscape. This is a new lens through which to view the evolving relationship between labor economics and restaurant profitability.