The restaurant industry is no stranger to disruption. From labor shortages to inflation, operators have handled their fair share of economic challenges. However, the latest wave of tariffs announced by President Donald Trump—and the broader context of reciprocal trade policies—could pose new difficulties for restaurants.
Tariffs and the Restaurant Supply Chain
Tariffs, which are essentially taxes on imported goods, are placed on products that restaurants rely upon, the ripple effects can be wide-ranging. The most immediate impact is cost. Food commodities like proteins and grains, which are already subject to price volatility, could see further increases if sourced internationally. Many restaurants—particularly large chains—rely on global supply chains to keep costs manageable and product availability stable. For example, certain types of seafood, spices and specialty grains are often imported due to domestic scarcity or quality preferences.
Beyond food, the restaurant industry is heavily dependent on non-consumable imports. Takeout containers, kitchen equipment, uniforms, cleaning supplies and other operational necessities are frequently manufactured abroad, often in China. When tariffs increase the cost of these goods, restaurants must either absorb the cost or pass it along to consumers. Neither option is attractive in a hyper-competitive market where diners are becoming more price-sensitive.
Large Chains vs. Independent Restaurants
While the effects of tariffs will be felt across the board, large restaurant companies may feel the brunt more acutely. This might seem counterintuitive, given their economies of scale. However, these chains typically have complex, international supply chains and are more exposed to global markets. As the National Restaurant Association noted, “The biggest concerns for restaurant operators—from community restaurants to national chains—are the cumulative effects these tariffs will have on our supply chain.”
Larger chains are also more likely to engage in long-term vendor contracts that could be affected mid-stream by new tariff rules. They may find themselves renegotiating prices or scrambling to find domestic suppliers—who are likely to raise their prices in response to increased demand. Even those companies that have the infrastructure to adapt quickly may face delays and added costs during the transition.
Surging Prices
According to recent insights from Restaurant Business Online, a new round of sweeping tariffs could lead to price increases on everything from meat to menu boards. The industry has already seen packaging costs surge up to 40 percent in the past five years, partly due to ongoing trade tensions. Tariffs could potentially exacerbate these issues.
One of the less obvious but equally critical impacts is on innovation. As prices rise, restaurants are forced to divert funds from research and development (R&D), marketing or customer experience initiatives to cover basic operational costs. This stifles growth and competitiveness—particularly in an industry where consumer preferences evolve rapidly and innovation is a key differentiator.
The International Ripple Effect
Many U.S. restaurants, especially those in multicultural urban centers, feature international cuisines that rely on authentic imported ingredients. The authenticity of sushi, Thai curries, or Italian pasta dishes can be compromised when tariffs make imported ingredients prohibitively expensive. In some cases, substitutions simply aren’t possible, meaning either menu changes or inflated pricing—neither of which appeals to the average customer.
In hospitality hubs like New York, Los Angeles, or Miami, where tourism and global cuisines are integral to the local economy, these impacts could be disproportionately high. Higher menu prices, product shortages, and inconsistent supply can negatively affect customer satisfaction and repeat business.
Navigating the 90-Day Tariff Pause
In April 2025, President Trump announced a 90-day pause on most of the proposed tariff hikes, reducing them to a 10 percent flat rate for many trading partners, while increasing tariffs on Chinese imports to 245 percent. This temporary reprieve offers restaurants a critical window to reassess and adapt their operations. This 90-day window is not just a pause but an opportunity for proactive planning and adaptation. Therefore, restaurants should consider the following strategies during this period:
- Vendor Diversification: Expanding the supplier base to include more domestic or tariff-exempt vendors can mitigate some cost pressures.
- Inventory Strategy: Restaurants should explore more strategic stockpiling of key goods when prices are favorable or before tariff deadlines.
- Menu Engineering: By analyzing item-level profitability, restaurants can redesign menus to focus on high-margin, low-impact ingredients.
- Technology Investment: Implementing supply chain management software can help operators forecast demand, reduce waste and optimize procurement.
- Engage in Advocacy: Collaborate with industry associations to voice concerns and influence policy decisions that affect the restaurant sector.
- Financial Planning: Use this period to build financial resilience, exploring options like emergency funds or flexible pricing models to cushion against future shocks.
Why Restaurants Need an Advisor to Address Tariff Impacts
Tariffs may be aimed at leveling the international trade playing field, but their unintended consequences are often felt at the local dinner table. For restaurants, especially those that depend on international products, these policy shifts can lead to higher costs, constrained supply chains and difficult operational decisions. In an environment already fraught with economic challenges, tariffs represent yet another test of the industry’s resilience.
For now, the key to surviving the turbulence lies in adaptability, which can be achieved with the help of a trusted advisor. Windham Brannon’s Restaurant Practice professionals can help restaurant operators proactively reassess their supply chains, pricing models and vendor relationships in order to be better positioned in the marketplace. For questions or more information, reach out to your Windham Brannon advisor today, or contact Maggie Wise.
