At this rate, what happens in the next few weeks—or even the next few hours—is anyone’s guess. The smartest strategy is to plan for multiple scenarios using real market data: after all, the best way to stay ahead is to look ahead.
In this article, we’ll examine the broad impact of tariffs on foodservice establishments; offer practical steps operators and suppliers can take to mitigate risk; and share a real-life Price Shock & Tariff Simulator to help visualize potential scenarios and reduce uncertainty.
US Operators Will Feel the Pinch
Operators and suppliers accustomed to relatively stable supply chains are now facing upheaval as they try to wrap their heads around the impact to their business. Let’s consider a few major US imports and how many establishments may be affected by their tariffs.
In 2023, the US imported over $40 billion in Canadian agricultural products, including $4.8 billion in canola oil and $1.6 billion in frozen potato products: both key ingredients in restaurant kitchens.
Brizo FoodMetrics data shows that 379,000 US establishments serve fries…in other words, a LOT of frozen potatoes deep-fried in canola oil. Though fries typically boast high profit margins, there’s no doubt that these operators will feel the squeeze from a 25% price jump on their primary ingredients.
Meanwhile, 89% of US avocado imports come from Mexico. Out of 518,000 US restaurants using avocados, 287,000 of those are independents, who have less purchasing power than larger chains.
Meanwhile, breaking down those avocado-using establishments by cuisine, chain, and region can highlight which segments may be hit hardest, helping operators and suppliers prepare for potential cost surges.
5 Ways Operators and Suppliers Can Protect Themselves
As they stare down the barrel of tariffs, foodservice operators, distributors, and manufacturers must stay resilient—and to stay resilient, they must be strategic. Let’s look at a few practical steps they can take to make informed decisions and keep business operations on track.
1. Monitor Price Fluctuations
Historical market data is a powerful tool for tracking wider industry trends and optimizing pricing strategies. Following how competitors adjust prices in response to tariffs can help businesses stay aware and adapt their own operations accordingly.
2. Forecast Market Demand
Tariffs will impact consumers and operators differently across demographics and regions. Analyzing price sensitivity by customer segment can help predict shifts in purchasing behavior and guide pricing and product strategies.
3. Understand Supply Chains
Suppliers should take a consultative approach and help educate operators on how ingredient sourcing might impact menu pricing. Suggesting alternative products or identifying which items can absorb cost increases is crucial for maintaining profitability up and down the supply chain.
4. Pass Costs Strategically
Rather than resorting to across-the-board price hikes, operators can implement targeted pricing strategies by working with suppliers and industry experts to understand the price elasticity of different items and ingredients. The recent surge in value-driven LTOs shows how brands can retain customers while managing rising costs.
5. Gain a Complete Industry View
Predicting and modeling cost spikes on key ingredients means integrating multiple data points, including ingredient costs, competitor shifts, consumer behavior, and regional vulnerabilities. A data-driven approach can help businesses anticipate and prepare for challenges before they escalate.
Imagine a comprehensive risk assessment that brings together key market data: let's call it a tariff vulnerability index. What kind of data could fuel this model?
- Menu Data: Identify tariff-susceptible dishes and ingredients
- Historical Pricing Data: Forecast market fluctuations using past trends
- Demographic Data: Assess price sensitivity by customer segment
- Geographic Data: Analyze location-based factors
- Technographic Data: Evaluate operator tech usage (like dynamic pricing)
The greatest power of this solution results from integrating your internal data with unbiased industry benchmarks like the data points above. While you already know your own costs, wouldn’t it be valuable to compare across chains and market segments? Armed with a custom solution tailored to your region, business type, or segment, you can take a smarter approach to managing industry shifts.
As a first step, Brizo FoodMetrics has developed an interactive Price Shock & Tariff Simulator, which we invite you to explore today.
Designed to go beyond just tariffs, the simulator also allows you to see how factors like rising egg prices, minimum wage increases, and inflation can affect your operations. Most excitingly, this initial model is just the beginning: by expanding it to incorporate additional data points, including your own internal data, you can gain even deeper insights and stay ahead of market uncertainty.
About Brizo FoodMetrics
Brizo FoodMetrics equips industry leaders with the actionable foodservice data and insights needed to make informed decisions based on facts, not hunches. Unlock full market visibility, scale business growth, and streamline workflows with large-scale, granular, and up-to-date market intelligence covering over 2.1 million establishments.
Learn more at brizodata.com