What Tariff Rollbacks Might Mean for Restaurant Costs

The recent Executive Order modifying tariffs on a number food and agricultural products could potentially bring relief to restaurant operators struggling with rising costs, but its full effect will not be immediate. Items such as coffee, cocoa, beef, and tomatoes may see improved pricing and availability however, country-specific tariffs such as those affecting products from Brazil and India do remain in place and continue to influence operator costs.

Eliminating tariffs on these goods is a common-sense step to strengthen the food supply chain, reduce cost pressures, and support menu innovation, National Restaurant Association President and CEO Michelle Korsmo noted, urging the administration to address additional actions on other items essential to restaurants such as alcohol, supplies, and equipment.

The more consumers understand the impact of the growing, harvesting and supply-chain cycle conditions, the more accepting they will be with the higher pricing.

“Restaurants depend on a steady, affordable supply of ingredients year-round. While we prioritize U.S. sourcing, many products simply cannot be grown domestically due to seasonal and climate limitations, said Korsmo.”This action will help keep menus diverse and prices reasonable, which is good for families and great for local businesses.”

While consumers should make it a point to pay attention at a very high level on any tariff news so they can plan their food choices accordingly, the fact is that the impact of tariffs on consumers is not immediate, Phil Kafarakis, CEO of IFMA, The Food Away From Home Association, suggested.

“Depending on the product(s) it could take supply-chains up to 90 days or even more for prices to be seen by consumers. The timeline is probably a bit shorter when it comes to dining away from home given that restaurants are quicker to change menu pricing and choices.”

Kafarakis added that now is the time for restaurateurs to inform guests about the food supply chain dynamics to provide context for higher menu prices.

“The best practice for restaurateurs is to educate consumers on where the food comes from, how its grown, processed and the shipped all the way from original source to the restaurant. The more consumers understand the impact of the growing, harvesting and supply-chain cycle conditions, the more accepting they will be with the higher pricing.”

Other suggestions from Kafarakis include: 

• Shift customer attention to menu not impacted by higher pricing.

• Give consumers various options while ensuring extraordinary service for a memorable experience that overcomes "sticker shock."

• Provide consumer product/meal specials and limited-time offer pricing.

• Create "meal bundles/pre-set meals" so guests can enjoy their meal without having to sort through the menu.

• Use transparency on the menu regarding product availability and prices. For example, indicate "market price" for higher priced products so that prices may be adjusted accordingly.

• Surprise consumers with a "chef's complementary appetizer welcome" or a special dessert as a sample of gratitude.

Operators might consider pausing major investments for the time being to contain costs on non-food or other items affected by tariffs, Kafarakis added.

“During times of pricing pressures avoid any redecorating and/or remodeling that could affect higher cost equipment and fixtures. Focus on repairs and avoid any major investments in items that be put off without jeopardizing the daily operation.”