What costs are hitting restaurants?
The Iran war is squeezing restaurants from every direction:
| Cost | Change | Impact |
|---|---|---|
| Cooking oils | Spiking (Hormuz blocks supply) | Core ingredient for frying, baking |
| Fresh produce | Up 1.4%+ and accelerating | Salads, sides, garnishes |
| Meat and poultry | Rising with feed costs | Most menu items |
| Delivery fuel | Gas up 20% | DoorDash, Uber Eats, in-house delivery |
| Energy bills | Up 15-25% | Cooking, refrigeration, HVAC |
| Packaging | Petroleum-based, rising | Takeout containers, bags |
Restaurant food costs were already up 3.9% year-over-year before the war. (PBS News)
Global restaurant crisis: India’s LPG shutdown
In India, the war triggered an acute LPG (cooking gas) crisis:
- 90% of Indian restaurants rely on LPG cylinders for cooking
- 10,000+ restaurants expected to shut down in Tamil Nadu alone
- The National Restaurant Association of India called it a “crisis situation”
- The industry employs 8 million people and generates $78.9 billion annually
Will US restaurant menu prices go up?
Yes. Expect 5-10% menu price increases in the near term as restaurants pass on:
- Higher food ingredient costs
- Rising energy bills for cooking and refrigeration
- Increased delivery and transportation costs
- Higher waste management costs
Some restaurants may also reduce portion sizes, simplify menus, or cut hours to manage costs.
What about restaurant workers?
Job risk varies:
- Fast food / quick service: Relatively stable (high demand, essential spending)
- Casual dining: Moderate risk (consumers cut dining out when budgets tighten)
- Fine dining: Higher risk (discretionary spending drops first)
- Delivery drivers: Squeezed by gas costs (see our gig worker FAQ)
Tips for restaurant owners
- Renegotiate supplier contracts to lock in prices
- Simplify your menu to reduce waste and ingredient variety
- Raise prices strategically — small increases across the board rather than large jumps on individual items
- Push takeout and delivery — lower overhead than dine-in
- Explore local sourcing to reduce exposure to global supply chains
- Monitor SBA resources for potential emergency assistance