The New EHS Newsletter No. 1 February 11, 2026

The Duck Wings at The Duck Inn

FRONT PAGE NEWS

At EHS, we’re excited to introduce our new monthly newsletter. This will be your go-to source for navigating the ever-changing restaurant industry.

Each month, our team will share relevant news, market insights, benchmarking data, expert advice, and client success stories to keep you informed and empowered. Our mission is simple: to provide the information and clarity you need to make confident financial decisions.

This newsletter is tailored exclusively for you, our valued clients and industry colleagues. We’d love to hear your feedback, so we can continue refining it to best serve your needs.

 2025 Year in Review

2025 was shaped by an AI-driven stock market rally and economic uncertainty from political instability and tariffs. Overall, consumer spending proved selective but resilient, and financial performance was mixed for our clients.

Overall:

• The K-shaped economy held up: The economy is currently split into people who dine and people who don’t, and the top half creates opportunity for our operators.

• YoY growth came from major sales initiatives and operational excellence: While 2025 proved challenging for guest counts and foot traffic, the clients that grew demonstrated a combination of operational excellence, additional meal periods, and revenue center expansion. 

• Everyone was nervous pretty much the whole time: At the beginning of the year, it was tariffs. By the end, it was ICE enforcement. Throughout, we had a highly unstable administration, to say the least. Of course, this only creates challenges for the operator and consumer and strengthens the need for operational discipline and culture-building.

2026 Outlook

Our outlook for 2026 is that the environment will remain challenging, but there will still be opportunities for growth-driven concepts. Following the example of the 2025 winners:

• Operational excellence fosters success: The customer remains selective, and operators can’t afford lapses in the basics of great food, service, and the guest experience.

• Find ways to add guests in bulk: Adding new meal periods & revenue centers is the best way to gain more control over your own narrative

• Don’t expect changes to the big picture any time soon: Right now we’re seeing inflation down but not out, an all-time high for the S&P 500 (as of Jan 28), and a growing economy. But 2026 brings the midterm elections and another year with our current administration. While there’s reason for optimism according to Open Table, the biggest challenge will be guest attrition within a customer base that should continue to spend.

Where to Start: Prime Cost

Prime Cost is Total COGS + Total Labor. It accounts for almost all of a business’s controllable costs and approximately ⅔ of total expenses. Here are some tips and tricks for getting your arms around Prime Cost:

• View it holistically: The cost of creating your product comes from the cost of buying it and the cost of making it. Restaurants heavy in scratch cooking may have higher labor, while restaurants purchasing more meat and prepared foods may have higher in COGS. 

• 65% is the magic number: Setting target percentages between COGS and labor depends on the concept, but generally, food falls between 24-30% and labor between 35-40%. 

• Tackle food first: at EHS, we’re sensitive to attacking the labor model because we know your people matter, so the best way to improve profitability over the long term is to develop solid food cost management principles.

  Of course, every restaurant’s path is unique. If you’re considering where to focus next, EHS welcomes the chance to review your priorities and explore the opportunities together.

Contact us....

We’d love to hear what you think, what you'd like to see more of, and how we can make this newsletter even better for you. After all, the best conversations go both ways.

-The EHS Team

ehsbusinesssolutions.com