There was a time when the global supply chain was an unseen network, crisscrossing the globe with relative ease and reliability. Then, the pandemic hit, and supply chain disruptions became a way of life.
While the challenges we faced caused us to look at how and where we purchase products, many restaurants still count on a dependable overseas supply chain to see them through. Today, wars, pirating, weather, and the uncertainty of tariffs can disrupt trade flow at any time. To stay ahead of the possible challenges, restaurant owners are developing sourcing strategies and taking a close look at the whole of their supply chain cycle.
Increasing costs and limited supplies are a few of the essential considerations.
The Effect of Tariffs…Maybe
Will the spring of 2025 witness 25% tariffs levied on Mexican and Canadian goods? Who knows. We do know the first effects of a 10% tariff on Chinese goods, including the retaliatory measures on liquid natural gas, US coal, and agricultural machinery that have gone into effect. Restaurants incorporating unique or specialty Chinese ingredients are disproportionately affected, impacting pricing and supply.
Should Canada’s and Mexico’s tariffs go through, we can expect higher costs associated with avocados, an item that appears on over 40% of all restaurant menus, according to Technomic Ignite.
According to the National Restaurant Association, the top Canadian food and beverage imports include:
- Baked Goods and Pastries
- Oils like Rapeseed and Mustard
- Chilled or Fresh Beef
- Chocolate and Cocoa-Based Foods
- Frozen Prepared or Preserved Vegetables
- Crustaceans (Shrimp or Crab)
- Fresh or Chilled Fish
- Pork
- Fresh or Chilled Vegetables
According to the USDA, in 2022, Mexico was responsible for 69% of U.S. vegetable and 51% of fresh fruit imports. The top imports from Mexico include:
- Beer and Alcoholic Beverages
- Fresh Fruits
- Specifically: Dates, Figs, Pineapples, Avocados, Citrus Fruits, Grapes, Cucumbers, Tomatoes
- Fresh or Chilled Vegetables
- Baked Goods
- Fresh or Chilled Beef
- Sugar Confections
- Preserved Fruits and Nuts
- Cane or Beet Sugar
Of course, it’s not just food impacted by potential supply chain disruptions. Restaurant equipment would also feel its effects. Beverage programs would also need to be modified. According to AP News, in 2023, Mexico’s imports included $4.6 billion in tequila and $108 million worth of mezcal. Imported Canadian spirits came in at $537 million.
Another impact is a market scaling back their expectations of 2025 Fed rate cuts.
Rising Restaurant Prices
While we tend to think of restaurant costs in terms of food and beverages, numerous operational expenses are affected by rising prices. Push Operations noted the key restaurant costs that surged from 2019 to 2024:
- Swipe Fees (up 32%)
- Labor (up 31%)
- Food (up 29%
- Supplies (up 20%)
- Utilities (up 16%)
- Occupancy (up 12%)
They noted that restaurant prices needed to increase by over 26% to cover these expenses. They rose by just over 27%, aligning with the necessary charges to offset the increasing costs.
Preparing for Supply Chain Challenges
It’s best to be prepared should the global escalation of tariffs prove a reality. The key is diversification.
Restaurants are expanding their supplier network and building diversity by integrating more local and regional providers. With customers increasingly searching for restaurants that reduce their impact on the environment and support regenerative farming practices, creating a network of local suppliers has become increasingly common. These items include produce, protein, and specialty products.
Additionally, incorporating a seasonal menu supports the local community, reduces the need for imports, helps manage costs, and provides fresher food for guests. Regional suppliers bridge any gaps created by broader disruptions.
At Emerging Concepts, our strategic services include Consolidated Concepts, a supply chain solution that leverages expertise in supply chain management, operations, distribution, produce management, and spend management technologies. By coming together, we reduce your costs by leveraging over $10 billion in annual purchasing power. We streamline the supply chain by partnering with broadline and category specialists to ensure reliability and continued profitability.
To learn more about our services, contact Emerging Concepts or schedule a consultation.
