There’s been a lot of talk lately about tariffs, and as a restaurant owner, you might be wondering what all of this has to do with you. Running a restaurant comes with its fair share of challenges, from managing food costs to keeping customers happy. Staying informed about economic factors like tariffs is crucial for protecting your business.
Tariffs, which are taxes on imported goods, can affect many areas of your restaurant. Whether you’re a chef, restauranteur, or caterer, understanding how tariffs impact your operations, and knowing how to handle their effects, can help protect your bottom line.
The restaurant industry has always run on tight margins and has faced tough challenges in recent years, from the pandemic to labor shortages, inflation, and price hikes due to global issues like the avian flu. Now, tariffs are adding more pressure, making things even more uncertain for restaurant owners. There’s only so much businesses can absorb before they hit a breaking point, and customers can only tolerate so much before it affects their dining choices.
What is a Tariff?
A tariff is a tax imposed by a government on imported goods, making them more expensive in the domestic market. These measures are often implemented to protect local industries from foreign competition or as a response to trade disputes. However, when tariffs are applied, especially on essential restaurant industry items, the ripple effect can be serious. Rising import prices are forecasted to cause significant price increases, placing further strain on restaurants already struggling with rising costs.
In 2025, the U.S. plans on imposing tariffs on imports from countries like China, Mexico, and Canada, affecting a wide range of products such as produce, meats, kitchen equipment, and beverage supplies. In the short term, restaurants may face higher prices, requiring adjustments in sourcing and pricing to maintain profitability. While the challenges would be immediate, the long-term goal of the tariffs is to encourage the use of domestic goods, strengthen the U.S. economy, create jobs, and reduce reliance on foreign markets. This shift aims to benefit the domestic market, though it creates short-term difficulties for restaurants adapting to these changes.
Restaurant Equipment and Tariffs
Restaurant equipment is a major investment, and many essential items such as refrigeration units, commercial ovens, cookware, and dishwashers are manufactured both in the U.S. and overseas. Tariffs on imported equipment can increase prices by 10% to 25%, making necessary upgrades more expensive and delaying expansions.
While U.S.-made refrigerators, ice machines, and restaurant ranges are available, they often come at a higher price point due to domestic manufacturing costs. This makes imported alternatives more attractive, despite tariff increases. However, investing in energy-efficient models, whether domestic or imported, can reduce long-term operating costs and offset initial expenses.
Beyond equipment, tariffs on stainless steel (used in kitchenware), aluminum (used in cookware and packaging), and glassware (such as bottles and serving dishes) can also drive up costs. Stainless steel, a staple in commercial kitchens for its durability and sanitation benefits, may also be impacted, and can affect everything from cookware and cutlery to prep tables and ovens.
For restaurant owners, balancing cost, efficiency, and durability is key when making purchasing decisions. Whether choosing American made or imported options, sourcing wisely can help navigate rising costs.
Beverage Costs and Tariffs
Many beverage ingredients and products are sourced internationally, allowing restaurants to offer diverse selections to their customers. However, with tariffs affecting the cost of imported wines, liquors, and specialty ingredients like high-end coffee beans or exotic fruit juices, prices are rising. Restaurateurs are now faced with the challenge of either absorbing these increased costs or passing them on to customers.
Additionally, tariffs on packaging materials like aluminum (for cans) and glass (for bottles) are increasing costs for beverage manufacturers and suppliers, ultimately impacting restaurant purchase prices. If your establishment relies on craft beverages, specialty cocktails, or imported wines, maintaining this section of your menu could become more expensive.
To manage these challenges, some restaurants are turning to domestic producers or altering beverage menus, featuring local breweries, sourcing regional wines, or crafting house-made alternatives to imported drinks.
Menu Pricing and Customer Expectations
One of the most immediate concerns tariffs present is their effect on menu pricing. As ingredient and equipment costs rise, many restaurants must adjust prices. This creates a dilemma: raise prices and risk losing customers, or absorb costs and sacrifice profit margins?
To tackle this issue, transparent communication is key. When restauranteurs use signage, menus, and social media to explain price increases, customers are more likely to understand that the restaurant is absorbing some of the impact of global economic shifts. This openness can help customers be more accepting of modest price adjustments.
Food Cost Increases and Supply Chain Disruptions
Tariffs can indirectly affect food costs through supply chain disruptions. For example, if produce from Mexico faces higher duties, delays and increased wholesale prices may follow. U.S.-based suppliers may also raise prices in response to changes in demand.
Tariffs on imported seafood and specialty meats can raise their prices, affecting restaurants that depend on these products. Additionally, tariffs on imported feed and farming equipment can increase production costs for domestic meat producers, potentially leading to higher prices for local meats. These factors add supply chain uncertainty, making flexible purchasing strategies a must.
With the new tariffs, restaurants that rely on imported specialty items, like seafood, meat, or produce such as avocados and tomatoes, may need to consider sourcing domestic alternatives or adjusting their menu offerings to reduce exposure to tariff-related price hikes.
How Tariffs Can Affect Independent and Chain Restaurants
Let’s take a look at some examples of how tariffs can affect different types of restaurants:
Small Mexican Restaurants Adapting to Avocado Tariffs
Rising avocado prices have forced small Mexican restaurants to rethink their menus. Some have introduced alternative guacamole recipes using chickpeas or zucchini, while others reduced portion sizes or added seasonal surcharges. Many now highlight house-made salsas and pickled vegetables as cost-effective, flavorful alternatives.
Bars and Bistros Adjusting to Liquor and Wine Tariffs
With the threat of higher tariffs on imported wines and liquor looming, small bistros and bars, already struggling with lower alcohol sales than in past years, are facing tough choices. Some have been stockpiling bottles before the price hikes, while others shifted to lesser-known domestic wines, from California, Oregon, and Washington to maintain variety without sacrificing margins. However, many agree that certain imports are not easily replaced by made in the USA counterparts such as tequila, Mexican beer and Canadian whiskey.
How the Big Chains Cope
Larger chains can absorb rising costs more easily due to their size and purchasing power. For instance, a national burrito chain responded to higher produce prices by negotiating with domestic suppliers and adding a small surcharge for guacamole. They also launched a marketing campaign to explain the price changes. These strategies are more difficult for independent restaurants, which have fewer resources to manage such adjustments.
Independent operators can draw helpful insights from small and large businesses alike, adapting strategies that are in tune with their unique needs and resources. By staying flexible and proactive, they can navigate the impact of tariffs, protect their margins, and continue offering quality experiences to their customers.
7 Smart Strategies for Restaurant Owners
Given the impact tariffs may have on your restaurant, here are several strategies to help mitigate the effects and keep your business running smoothly:
- Review Your Supply Chain: Work with vendors to understand which products are tariff-impacted and explore alternative suppliers, especially domestic ones.
- Source Equipment Strategically: When upgrading, look for refurbished or U.S.-made equipment to avoid import tariffs. Opting for durable, high-quality tools that serve many functions can also help reduce costs and improve efficiency.
- Adapt Your Menu: Use seasonal and locally available ingredients that are less affected by tariffs. Rotating menu items can also create a new and fresh experience for your customers.
- Educate and Communicate: Use social media and in-house marketing to explain pricing changes. Being transparent nurtures customer understanding and support from your customers.
- Monitor Policy Updates: Tariff policies change with administrations and international negotiations. Subscribing to industry newsletters, such as those from the National Restaurant Association, can help you prepare for the future.
- Highlight Local Sourcing: Make local sourcing a key part of your brand. It reduces tariff risk and attracts customers who care about sustainability and supporting the community.
- Get Creative with Beverage Menus: Replace pricier imports with signature cocktails, house-made syrups, and locally sourced wines and beers. Partner with regional breweries or distilleries for exclusive offerings.
Long-Term Considerations
Tariffs are just one of many economic forces currently shaping the hospitality industry, and while their effects may be temporary, their impact can ripple through pricing, supply chains, and customer behavior for the long haul. The key to navigating this challenge is to stay proactive and adaptable. By diversifying your supplier base, adjusting purchasing strategies, and staying informed about global trends, you can better position your restaurant for success.
This moment also offers an opportunity to reassess operations, strengthen relationships with local producers, and invest in systems that reduce dependence on international markets. With these strategies in place, you can turn the challenges posed by tariffs into opportunities for growth and innovation, ensuring your restaurant remains competitive and resilient in the long term.
If you are exploring ways to cut operational costs or revamp your menu to better align with rising expenses, our team of industry experts is here to help. Reach out today to discuss practical, tariff-proof strategies to keep your business thriving.