The restaurant industry has been facing rough waters for several years — and now, an unexpected voice is amplifying the urgency to adapt.
Costco’s Chief Financial Officer, Gary Millerchip, recently called attention to consumer spending shifts that could ripple across the restaurant sector. While Costco doesn’t operate in the restaurant space, its insights into how consumers are adjusting their budgets highlight key challenges for restaurant operators trying to stay ahead.
Restaurants today are under pressure from multiple fronts:
Rising costs: Inflation has driven up expenses for food, labor, rent, and utilities. According to Yahoo Finance(2025), many restaurants have been forced to raise menu prices or absorb higher costs — either of which puts profit margins at risk.
Bankruptcies and closures: High-profile chains like Red Lobster filed for Chapter 11 bankruptcy in May 2024, closing over 100 locations, while TGI Fridays filed for bankruptcy in late 2024 after operating roughly 600 restaurants nationwide (Restaurant Business Online, 2024). Even brands that have avoided bankruptcy, like Denny’s and Red Robin, have been closing underperforming locations to shore up finances (Yahoo Finance, 2025).
These challenges show that even well-known brands aren’t immune to today’s financial pressures.
But rising costs aren’t the only problem — it’s also how customers are responding.
Inflation has stretched household budgets, forcing many consumers to rethink spending priorities. While groceries are essential, restaurant meals — even fast food — increasingly feel like a luxury. According to The Motley Fool (2025), consumers are scaling back on dining out to conserve cash.
Costco CFO Gary Millerchip commented during the company’s March 2025 earnings call that members are prioritizing food at home over dining out:
“There’s some indication that members are spending a little bit more on food at home versus food away from home overall” (The Motley Fool, 2025).
This shift is backed by data from the U.S. Bureau of Labor Statistics. As of March 2025:
Overall food costs were up 3% year-over-year.
Restaurant prices increased by 3.8%.
Grocery prices rose just 2.4% (U.S. Bureau of Labor Statistics, CPI Summary, 2025).
This widening price gap makes dining out a tougher sell for many households.
Looking forward, restaurants face additional risks beyond inflation and shifting habits:
Tariff impacts: If new trade policies increase the cost of imported ingredients, restaurants may have to either raise prices or absorb even tighter margins (The Motley Fool, 2025).
Supply chain disruptions: Global trade tensions can create shortages or force menu changes, which could frustrate loyal customers.
Debt burdens: Chains still carrying pandemic-era debt could struggle as interest rates remain high (Yahoo Finance, 2025).
If these pressures persist, we may see more bankruptcies and closures across the industry.
Despite the storm clouds, restaurants have levers they can pull to adapt:
Optimize operations: Improve workflows, reduce waste, and explore automation in areas like scheduling, ordering, and inventory management.
Leverage data: Use insights from sales and customer behavior to adjust pricing, fine-tune menus, and plan promotions more effectively.
Enhance the guest experience: Focus on loyalty programs, improve convenience with digital tools, and deliver consistent quality.
Manage risk: Monitor debt, renegotiate supplier contracts, and explore local sourcing to minimize exposure to tariffs or supply chain shocks.
Millerchip’s warning isn’t just a signal to restaurant owners — it’s a heads-up for the entire ecosystem that supports them, from suppliers to technology providers. Surviving and thriving in this environment will require agility, smarter use of technology, and a laser focus on customer value.
At ResultStack, we help businesses across industries unlock the power of their data, streamline operations, and build more resilient organizations. For restaurants, adopting digital tools and data-driven decision-making isn’t just an upgrade — it’s fast becoming a lifeline.
Yahoo Finance, Costco CFO Issues Urgent Warning for Restaurant Industry → link
The Motley Fool, Costco CFO Discovers Pattern That Restaurant Chains Must Heed → link
U.S. Bureau of Labor Statistics, Consumer Price Index Summary → link
Restaurant Business Online, Red Lobster Files for Bankruptcy → link