Restaurants in Washington — normally counting on the holiday season to boost business — may face a “blue Christmas” instead. That’s the warning from industry leaders who say rising costs, high taxes, and soaring minimum wages are squeezing already‑thin restaurant profit margins across the state.
Anthony Anton, president and CEO of the Washington Hospitality Association (WHA), told The Center Square that many restaurateurs have already raised menu prices just to stay afloat. Meanwhile, customers are pushing back. “Costs have gone up, and customers are really pushing back on price,” Anton said. He added that operators have “exhausted all the small tricks you can do… There was nowhere else to turn.”
According to the WHA’s 2025 Dining Report, menu prices in Washington are already 13.6% higher than the national average — the highest among all 48 states compared in the survey. Anton pointed out that a major factor is the high cost of labor. Seattle, he noted, “is the second most expensive major U.S. city behind San Francisco,” and a $21.30 minimum wage kicks in there on January 1, 2026. SeaTac, Renton, and Burien will also raise their local wage floors.
That surge in labor costs has pushed many restaurants’ labor expenses to over 40% of revenue — far higher than the 30% or lower that is considered sustainable. At that level, profit margins can shrink to just 1.5 percent. “There’s just nowhere to go,” Anton said. The result: “We’ve seen a lot of closures this year.”
In addition to wages, many eateries are grappling with higher taxes and regulatory burdens. Some closed locations this year — including The Rock Wood‑Fired Pizza and a tasting room of Heritage Distillery — citing tax pressure and unsustainable costs. Businesses now pay sales tax twice: once on food costs themselves and again when customers dine. Add in increased business-and-occupation taxes (B&O tax), and for many, the math no longer works.
Anton warned that selective exemptions or tax increases will not help long-term: “When you carve out special treatment for certain industries, you shift the burden onto somebody else.” Instead, he urged lawmakers to consider broad-based reforms that would benefit all businesses and residents.
With the year-end rush looming — and slower months soon to follow — many restaurant owners say they’re operating on borrowed time. For now, families across Washington may find that dining out around the holidays means paying more for less — or finding they can’t afford it at all.
