F&B labor vs revenue 2024-2026 — the listed-cohort signal.

01 The macro set-up — wages have decelerated, pricing has held

Two BLS series anchor the macro picture for F&B operators in 2026. The first is CES7072200003 — average hourly earnings for production and nonsupervisory employees in food services and drinking places. The series ran $19.24/hr in January 2023, $20.14/hr in January 2024, $20.95/hr in January 2025, and the latest March 2026 print is $21.90/hr. That is a 13.5% cumulative climb over three years, but the YoY rate has compressed: ~5% in 2023, ~4.5% in 2024, ~3.5% through most of 2025, and most recent prints in the 2-3% range. Limited-service restaurants (CES7072250003) have tracked a touch lower — $18.95/hr in March 2023 to $21.22/hr in March 2026, or 12.0% over three years — partly because tipped-role wage pressure has been concentrated in full-service via state-level tip-credit changes.

The second is FRED series CUUR0000SEFV — the Food-Away-From-Home CPI. It peaked at 8.6% YoY in April 2023, decelerated steadily through 2024, bottomed near 3.4% in early 2025, and has hovered in the 3.5-4.0% band through April 2026. The implication on paper is straightforward: menu pricing in 2026 is running roughly 1-2 points ahead of food-service wage growth, the first time since 2022 that the operator has been able to lap labour with pricing. Restaurant-level margins should be expanding.

02 What the listed cohort actually reports

The cleanest available cross-check on the macro is the listed F&B cohort's own MD&A line on "labor and other related expenses" as a percentage of company-owned restaurant revenue. I pulled the Q1 2026 10-Qs for nine names spanning full-service casual, premium casual, limited-service, and coffee — TXRH, DRI, EAT, CAKE, BLMN, CMG, CAVA, WING, SBUX — and compared them to the Q1 2024 baseline.

Six of the nine operators reported a higher labor-cost percentage of revenue in their most-recent quarter than in Q1 2024. TXRH ran 33.2% → 33.5% (+30bp), DRI 30.8% → 31.4% (+60bp), CAKE actually improved 36.4% → 35.6% (-80bp, the cohort outlier on productivity), BLMN 29.9% → 30.4% (+50bp), CMG 24.7% → 25.6% (+90bp), CAVA 27.2% → 25.5% (-170bp — favourable mix as new units mature), WING 27.5% → 26.8% (-70bp at the franchisee level), and SBUX 29.0% → 30.1% (+110bp). EAT/Brinker improved meaningfully from 33.9% to 32.8% (-110bp), driven by the Chili's value-platform traffic surge that fixed operating leverage.

The aggregate read: even with wage growth decelerating from 5% to 2-3%, labor as a percentage of revenue is creeping UP for most operators. That is the macro-vs-micro gap that matters. Pricing decelerated to 3.5-4% at the same time, and traffic has been flat or negative at limited-service. The pricing-vs-wage wedge is real on the cost-input side, but the operator never captured it on the revenue side, because the price increases that closed the gap were taken at the expense of traffic.

03 Why the pricing line did not flow through

The reconciliation between the BLS macro and the 10-Q operator data is essentially a same-store-sales mix story. Pricing per-check held up — most of the cohort reported 2-4% pricing in Q1 2026. Traffic went the opposite way. CMG ran -0.4% same-store sales Q1 2026, the first negative print in years; SBUX -1.0%. CAVA at +2.5% is decelerating fast from the +30%+ comps of 2024. The full-service names held up better — DRI Olive Garden +5.6%, EAT Chili's +14.2% on the value-bundle pull, TXRH +4.3% on traffic + ticket — but the limited-service tier is showing real consumer fatigue at the current menu-pricing level.

The wage-pricing wedge gets eaten by traffic loss

The arithmetic is simple. If your hourly labour rate grew 3% and you took 4% price, the cost-line wedge is +100bp positive on its face. But if traffic falls 2%, your revenue per labour-hour falls (because labour scheduling is sticky on the downside — you cannot send a closer home when one fewer party walks in). The denominator of the labour-cost ratio shrinks faster than the numerator, and the ratio goes up. That is exactly what the limited-service cohort is showing.

Full-service is positioned better — for now

TXRH, DRI, and EAT all reported labour-percentage outcomes consistent with positive traffic absorbing the wage step-up. The premium-casual tier (TXRH, Outback within BLMN, Cheesecake Factory) has retained more pricing power because the alternative is cooking at home for a comparable check — there is no $9 fast-food bundle to defect to. The Q1 2026 read inside that tier looks materially healthier than the limited-service tier. The takeaway for private full-service operators in the $20-150M range is the same — traffic protection trumps pricing capture, and the operating discipline that has worked at TXRH (sub-3% pricing in 2026 even though wages are still up) is the right blueprint to study.

04 State-level wage and tip-credit overlays

The BLS national-level number masks material state-level variance that operating CFOs need to layer on top. The California FAST Recovery Act has held the fast-food minimum at $20.00/hr since April 2024 — roughly 50% above the federal minimum and ~30% above the prevailing California state minimum. The result is a structurally higher labour line for any limited-service operator with material California exposure (CMG, CAVA, WING, SBUX all carry meaningful exposure) that does not appear in the BLS national average because California is one of many states.

On the tipped side, DC Initiative 82 is phasing the tipped sub-minimum out by 2027 — the tipped wage hit $10/hr in July 2024, $12 in July 2025, and is on track for full minimum-wage equivalence by 2027. Chicago is on a five-year phased path that completes in 2028. The Massachusetts Question 5 ballot initiative was defeated in November 2024, which kept the tip credit intact in MA — a meaningful reprieve for full-service operators there, but a reminder that the question lands on ballots every cycle. For private multi-unit full-service operators with material exposure to DC, Chicago, NY, NJ, or CT, the next 24 months will see the largest single labour-rate step-up since the federal minimum-wage era ended.

The implication for the BLS national wage line is that the deceleration we are observing in the headline series understates the wage pressure that operators in tip-credit-elimination jurisdictions are actually carrying. A New York City casual-dining group will see a labour-line trajectory more like the listed full-service cohort's Q1 2026 +60bp creep than the BLS national headline's 2% deceleration. The geography of the unit footprint is the single biggest determinant of how the BLS macro translates into the private operator's P&L.

05 What this means for $20-150M private operators

For private multi-unit groups in the $20-150M revenue band, the listed-cohort read translates into three operating priorities that we have been working through with engagements over the last two quarters.

Re-baseline the labour-percentage budget against the listed comp

The single most useful exercise is rebuilding the FY26 labour budget against the listed-peer Q1 2026 actuals as the floor. If you are a casual-dining group running 33-35% labour-to-sales versus the cohort's 31-32% (DRI, EAT, TXRH), the gap is your operating opportunity. The drivers are usually a combination of FOH-vs-BOH split, scheduling-tool maturity, average labour-hour pay differential vs the BLS median, and seasonal cover ratios. The Putra & Co casual-dining engagement template walks unit-managers through a 90-day scheduling-tightening sprint that typically lands 60-120bp of labour leverage; the inputs are weekly-day-part-cover ratios from the POS plus a $/sales-per-labour-hour target tied to the cohort comp.

Treat pricing power as a finite resource

The limited-service cohort's Q1 2026 SSS prints (CMG -0.4%, SBUX -1.0%) are a warning. The 3-4% menu pricing taken industry-wide over the last 24 months has materially compressed the consumer's willingness to take another round in 2026. Private operators planning ~3% FY26 pricing should pressure-test the traffic elasticity assumption in the model — at our reads, the demand curve has steepened meaningfully since late 2025, and a 3% price step in a soft-traffic geography (suburban, value-skewed customer base) is likely to land closer to -1.5% traffic than the -0.5% historical norm. The next pricing round should be more surgical (LTO/menu-engineered, not flat) than the cohort's 2024 and 2025 broad-based passes.

Build the multi-unit P&L model on state-segmented wage assumptions

Operators with mixed-state footprints can no longer model labour off a single blended-wage assumption. The CA fast-food minimum, the DC/Chicago tip-credit phase-outs, and the NY-NJ-MA-WA-CO minimum-wage trajectories produce 200-400bp of unit-level labour-percentage variance depending on geography. The right model is a unit-by-unit labour bottom-up with state-level wage paths through 2028 — that is the model the listed cohort runs internally and that private operators usually do not.

06 Capital and deal implications

For multi-unit private operators contemplating capital events in 2026-2027 — sale, recap, or sponsor investment — the labour-vs-revenue read carries direct valuation implications. Buyer diligence in 2026 is materially focused on labour-line normalisation. The QoE conversation has shifted from food-cost basis questions in 2023 (when shrink and basis were the swing factors) to labour-line scheduling and overtime-add-back questions in 2026. We are seeing three lines of buyer focus in the casual-dining and limited-service QoE work we have advised on this year.

First, the buyer is asking for the labour-percentage trailing-24 walk by unit and by state, with a separate column for "wage step-up baked in 2026-2028" — they want to see that the operating-margin model the seller is selling does not assume favourable wage-rate assumptions that the state-level path will overturn. Second, the buyer is interrogating overtime — overtime as a percentage of total labour cost rising over the trailing-24 is a near-universal QoE flag because it usually means scheduling discipline degraded as wage rates rose and managers reverted to over-coverage. Third, the buyer is asking for the labour-percentage sensitivity to a +2% wage rate and +1% traffic compression — the stress-case the listed cohort runs internally.

In the engagements we have worked through, sellers who have a clean labour-walk story arrive at exclusivity at 0.5-1.0 turns of EBITDA above peers; sellers without it absorb a discount of similar magnitude. The diligence cost of preparing the labour-walk is modest — a 6-8 week reserve-and-overtime walk for a 20-50 unit group runs $40-80k of advisor time and typically pays for itself five times over at signing.

07 What we are watching into Q3 2026

Three signals matter into the next quarter for the F&B labour-vs-revenue read.

1. 01
   Limited-service Q2 2026 traffic prints: Whether CMG, SBUX, and CAVA stabilise traffic at low-single-digit decline or accelerate to the -3% to -5% range will determine whether the 2026 labour-percentage creep is a temporary mix issue or a structural reset. The Q2 2026 earnings calls in late July / early August are the read.
2. 02
   Full-service pricing discipline: Whether TXRH, DRI, and EAT hold the line on sub-3% pricing into H2 2026 (versus reverting to the 3-4% historical pass) is the cleanest read on whether the cohort has internalised the limited-service consumer fatigue story. Watch the Q3 2026 prepared-remarks language on "menu pricing strategy" carefully.
3. 03
   State-level tip-credit ballot initiatives: The November 2026 state-ballot cycle includes likely tip-credit initiatives in 3-5 states. The cumulative wage step-up over the next 24 months will be highly contingent on which initiatives pass. The Q3 2026 polling data starts landing in August.

We publish this listed-cohort labour-vs-revenue read quarterly; the Q3 2026 update is scheduled for August 2026 alongside the operator earnings cycle.