The Roy Howard Community Journalism Center’s “What is True?” team investigated claims circulating on social media that rising costs are pushing an increasing number of local “mom-and-pop” restaurants to close as customers attempt to save by eating at home more.   

RESULTS: Misleading Claims

Several restaurants are closing, but customers are still favoring beloved local restaurants over national chains and fast-food places.  

According to the Mississippi Hospitality & Restaurant Association, there are more than 6,000 food service establishments in the state, and all are feeling the impact of inflation.   

The 2026 State of the Restaurant Industry Report by the National Restaurant Association reported food costs ending 2025 up 38% from 2019, with labor costs up 35% during the same period.   

“Costs are increasing for both customers and operators,” said Pat Fontaine, executive director of the Mississippi Hospitality & Restaurant Association. “We’ve reached a threshold, restaurants have raised prices to the point where customers are making the choice not to dine out, and margins diminish as restaurants try to absorb some of those costs.”   

The State of the Industry report shows the average full-service restaurant operated at a 2.8% return, down from 4-5% pre-pandemic. Limited-service restaurants are operating at a 4% profit margin, down from 6-8% per pandemic.   

“I think many across the state are at the point where they are just hanging on,” Fontaine said.  

Combined with significant increases in food and labor costs and limited ability to substantially raise menu prices, 42% of operators nationwide reported their restaurants weren’t profitable in 2025, according to the NRA report.    

“Restaurant owners never had to scrutinize line-item costs this closely,” Fontaine said. “It’s put a priority on menu engineering.”   

Restaurants are cutting the fat, featuring the most popular and profitable items, as well as items that might be less labor-intensive, to cut time and expenses.    

“With the prime costs of labor and food making 70% of your total expenses, add a lease, utilities, equipment, there’s no room for error,” Fontaine said.  

Haskins said he’s been slower to raise prices because small restaurants are more visible in the communities they serve.   

“You build relationships with your customers,” he said. “Hattiesburg is a unique market as we have a lot more restaurants, particularly local, which makes it very competitive. But residents take pride in local restaurants, and it contributes to loyalty. If we continue to do things right, people continue to dine with us.”   

While the increased costs might appear to have a greater impact on small businesses such as Haskins, its franchises and chain restaurants, which are seemingly succumbing to the attrition of the current environment.    

In Hattiesburg, chains and franchises like Steak & Shake, Pyro’s, Big Chicken, Golden Chick, and O’Charley’s, once bustling in their primes, high-traffic locations, are now vacant.    

“Franchises work differently from local restaurants,” Haskin said. “Often they don’t make the margins they expect, and they close.”   

He’s already had calls on the Big Chicken location adjacent to Walmart on 98 and three other restaurant inquiries in the last 24 hours.   

Restaurants hold a similar prioritization in their customers’ lives. Despite financial pressures, consumers still view restaurants as essential. Even among those struggling to keep up with monthly expenses, the NRA documents 61% of adults consider restaurants essential to their lifestyles and plan to continue dining out in 2026. Overall, restaurant spending accounts for 53% of the household food dollar, according to the NRA report.   

As the economy pinches household incomes, Haskins has seen changes in dining patterns.  

“Family time at a restaurant used to be dinner,” he said. “Now it’s more breakfasts and lunches to stretch those dollars further.”   

OpenTable’s 2026 Dining Trends Report estimates that the average American plans to dine out 10 times per month in 2026. NRA’s report finds 70% of consumers would use restaurants more often if they had the money.  

“Covid may have gotten people comfortable eating at home, but they are not giving up on the convenience and the flavor we offer,” said Haskins.