The food industry – spanning food manufacturers, distributors, and grocery retailers – is significantly exposed to recent tariffs. Food supply chains are global, and the new import taxes drive up costs for a wide range of food products and inputs. Below we examine the broad effects on different parts of the food operations sector:

Key Product Categories Affected

Some categories will experience acute impacts due to high import reliance:

Seafood

• Over 70–85% of seafood consumed in the U.S.- including shrimp, salmon, tuna, and squid—is imported from regions like Asia, Europe, and Canada. China is a key supplier, not just for seafood but also for items like garlic and apple juice. |  cspinet.org 
• New tariffs – 34% on Chinese imports and 10–25% on others (April 10 Note: Chinese seafood imports may now face a steep 125% tariff) are expected to drive up seafood prices sharply. Industry analysts warn these tariffs “will significantly increase the prices of commonly imported items such as… certain seafood.” | harris-sliwoski.com 
• While domestic producers (e.g., Gulf shrimpers, Alaskan fisheries) may fill some supply gaps, they cannot match the volume of imports and may raise prices due to less competition. Restaurants relying heavily on imported seafood—like sushi bars and seafood grills—are already seeing cost spikes for items like Atlantic salmon, shrimp, squid, and crab. A Florida distributor noted many popular menu items will now see double-digit price hikes. | fastcasual.com
• Tariffs also affect land-based proteins. Higher feed costs from import tariffs are raising U.S. meat and poultry prices. As of February 2025, CPI data shows a 0.3% monthly and 5% year-over-year increase in prices for meat, poultry, fish, and eggs—with further acceleration expected. | fastcasual.com

Fresh Produce

• Americans’ produce aisles depend heavily on imports, especially off-season. Mexico, for instance, supplies 51% of U.S. fresh fruit imports and 69% of fresh vegetable imports (as of 2022). Canada is another key source of produce and horticultural goods. These top suppliers now face 25% tariffs on many goods. | cspinet.org
• Staple items like tomatoes, avocados, berries, peppers, and bananas (none grown year-round domestically) will become more expensive. Analysts predict, for example, that tomato prices could jump roughly 25% under the new tariff regime. | fastcasual.com
• Fresh produce prices rose 2.2% from the April 2 tariffs alone and 4.0% when accounting for all 2025 tariffs to date. These increases are comparable to a full year’s worth of grocery inflation and directly affect costs for restaurants relying on fruits, vegetables, and nuts. This impact is especially significant for establishments focused on fresh, healthy, or plant-based menus. | Yale 

Beverages 

• Coffee beans are almost entirely imported, so coffee shops and diners face higher bean prices (potentially passed on as a few cents more per cup). Tea is in the same boat. | harris-sliwoski.com
• Alcoholic beverages see a big impact: restaurants and bars that offer imported wines, beers, and spirits are now paying more. European wines (French, Italian) carry 20% tariffs; Australian or Chilean wines around 10–15%; Scotch whisky and Irish whiskey 10%; and so on. | harris-sliwoski.com These costs will either translate to higher drink menu prices or bars substituting with domestic options. Some high-end bars anticipate price hikes on single-malt scotches or cognacs, for example. Even imported beer and sake become pricier, affecting diverse cuisine restaurants (German beer gardens, sushi bars, etc.). Non-alcoholic drinks can be hit too if they use imported ingredients (think of a tropical juice or an Italian San Pellegrino soda).

Specialty/Ethnic Ingredients

• Restaurants that serve international cuisines or gourmet fare often depend on unique imported ingredients. For instance, Italian restaurants import olive oil, Parma ham, and Parmesan cheese; Asian restaurants import specialty sauces, spices (e.g. Thai curry paste, Japanese nori seaweed), and noodles; Mexican restaurants import some cheeses, vanilla, or produce from Latin America. Many of these items now have tariffs in the teens or higher. The cost of these signature ingredients is rising, forcing restaurants to consider recipe tweaks or higher menu prices. (April 10 Note: Imports from China now carry a 125% tariff, affecting sauces, spices, and core ingredients in many Asian dishes) | harris-sliwoski.com

Packaging And Supplies

• Beyond food ingredients, restaurants also use imported paper products, disposables, and equipment. The tariffs apply to those as well. Packaging costs for takeout (napkins, to-go containers, coffee cups) could rise if those items or raw materials are imported. | harris-sliwoski.com
• Kitchen equipment and tableware are also a concern – many restaurants import kitchen appliances, specialty cookware, or tableware (e.g. Italian pizza ovens, German dishwashers, Japanese knives, European china). According to one analysis, high-quality china and glassware from Europe, or kitchen gadgets from overseas, will get pricier. | harris-sliwoski.com
• Restaurants planning renovations or new locations may face higher costs for outfitting their kitchens and dining rooms. This is an indirect effect, but it adds to the overall increase in operating expenses for the hospitality sector. | harris-sliwoski.com

 

Potential Effect On Menu Prices and Margins

Restaurants Were Already Absorbing Inflation Pre-Tariff

• According to a press release by the National Restaurant Association, food costs have already risen ~40% over the past five years (pre-tariffs), yet menu prices only rose ~30% in that period – indicating operators were already absorbing some inflation. The tariffs exacerbate this trend | restaurant.org
• If restaurants fully pass through tariff-driven cost increases, menu prices could rise—potentially impacting customer traffic. On the other hand, absorbing those costs can put pressure on already tight margins. Striking the right balance will be key. According to the National Restaurant Association, operators are already navigating rising costs and working to manage both pricing and supply chain uncertainty without compromising the customer experience. restaurant.org

Projected Restaurant Price Increase

• According to Yale’s research lab, early estimates from industry economists are that the new tariffs could raise overall U.S. food-away-from-home (restaurant) prices by around 2.8% above baseline. | Yale
• The report states that all 2025 tariffs combined are projected to increase the overall consumer price level by 2.3% in the short run, assuming no Federal Reserve policy response. A 2–3% cost increase may sound modest, but in an industry with slim margins it is quite significant – it can be the difference between profit and loss for many establishments.

Restaurant Segment Differences

Quick-Service and Fast Casual Restaurants May Not Be As Affected

• These establishments (fast food, café chains, fast casual bowl/sandwich shops) often have simpler menus with a heavy reliance on domestically sourced staples (beef, chicken, potatoes, bread). They are somewhat insulated compared to fine dining, but not immune. Many fast-food items (burgers, fries, soda) use mainly U.S. inputs. However, even fast-food is seeing cost pressures – for example, the price of beef for burgers is up (partly due to tariffs on feed and transport, contributing to a 7.6% YoY beef price increase by early 2025). | fastcasual.com Fries use a lot of potatoes – if tariffs disrupt potato trade with Canada (which supplies 25% of U.S. potato products), costs for frozen fries could rise next year. | capitalpress.com Fast-food chains compete on low prices, so they are trying hard not to raise menu prices. Instead, giants like McDonald’s are doubling down on value promotions (e.g. $1 menu items) to keep price-sensitive customers coming. | emarketer.com They also have scale to negotiate better prices. Smaller fast-casual shops, however, feel the squeeze – a boutique salad or bowl shop that uses avocado, mango, or imported spices will pay more and may have to either trim portion sizes or increase prices slightly. Surveys indicate that lower-income consumers (who frequent fast-food for its affordability) would cut back if fast-food prices rise too much, so this segment is very cautious. Some are emphasizing local sourcing as a marketing angle (“locally sourced produce”) which conveniently also sidesteps tariffs. | emarketer.com

Casual and Mid-Scale Dining Could Feel The Pressure

• Family dining chains and casual dining restaurants (think chain diners, bar-and-grill concepts, local bistros) are seeing broad cost inflation. They often import certain beverages (wines, beer) and use produce year-round. These restaurants have moderate pricing power – they can raise entrée prices a bit, but their customer base is price-conscious middle-class families who will notice. This segment was already struggling with higher labor and food costs; the tariffs add another headwind. Industry analysts predict some mid-tier casual restaurants may be forced to simplify menus, dropping the priciest imported delicacies and focusing on comfort foods with domestic inputs (pastas, chicken, burgers, etc.). In fact, there’s concern that mid-tier restaurants could be squeezed out: consumers with tight budgets might opt for cheaper fast-food or cooking at home, while those with more to spend might trade up to premium experiences, leaving mid-range places in a tough spot. | forbes.com. 

Fine Dining Could Be Exposed Due to More Exotic, Imported Ingredients

•  Upscale restaurants and steakhouses typically have more cushion to raise prices, since their affluent clientele is less price-sensitive. However, fine dining is uniquely exposed to tariffs because they often emphasize exotic imported ingredients – think Wagyu beef from Japan (now tariffed ~24%), truffles from Europe, bluefin tuna from the Mediterranean, imported caviar, French wines, etc. These restaurants will either have to charge significantly more for those items or reorient to domestic luxury ingredients (e.g. using American Wagyu or local farmed caviar). We are seeing some high-end chefs double down on the “farm-to-table” domestic sourcing philosophy – which not only avoids tariffs but appeals to locavore trends. For example, an upscale New American restaurant might highlight U.S. oysters instead of imported ones, or California wines in lieu of French. Fine dining venues also have higher margins per dish (via significant markups), so they might absorb some cost or accept a slightly lower margin on a signature imported item to keep it on the menu. In some cases, they pass costs on without much pushback – a $200 tasting menu might quietly become $210. International tourism is a factor too: if foreign tourist visits to the U.S. decline due to global trade tensions or retaliatory measures, fine dining in tourist hubs could see fewer big-spending guests. | harris-sliwoski.com This segment is better positioned to adapt, but tariffs undeniably raise their cost of doing business and narrow their ingredient options.

Operational Adjustments and Menu Engineering

Ingredient Substitution

• Chefs are seeking domestic or tariff-free substitutes for imported ingredients wherever possible. For example, a restaurant might replace imported Italian tomatoes with U.S.-grown tomatoes (when in season), or substitute a locally farmed fish for an imported one. Some sushi restaurants are experimenting with more U.S.-farmed seafood; Italian eateries might use Wisconsin mozzarella instead of Italian bufala mozzarella. However, substitutes can alter flavor or quality, so chefs must balance culinary integrity against cost.

Portion and Menu Tweaks 

• To manage costs, some are tweaking portion sizes or recipe composition. High-cost ingredients (e.g. avocado, premium seafood) might be served in slightly smaller portions or paired with cheaper components. Menus are being re-engineered – for instance, offering more dishes centered on domestic chicken (plentiful and not directly tariffed) and fewer on expensive imported beef or seafood. In the fast-casual segment, operators report adjusting portion sizes and exploring alternative proteins (like plant-based or local options) to cope with rising beef prices. | fastcasual.com Expect to see more seasonal menus as well. Restaurants will feature domestic produce when abundant (avoiding imports), then possibly rotate the menu in winter to heartier dishes that rely less on pricey imported veggies.

Selective Price Increases

• Many restaurants are raising menu prices, but carefully. Rather than a blanket increase, they might upcharge only certain items that are most affected. For instance, a seafood platter price might increase significantly, whole chicken dishes rise only slightly. Some are adding explicit “surcharges” or market price notations for items directly hit by tariffs, to call out the cause to customers. The strategy is to maintain customer goodwill by being transparent about why prices are higher (“Due to import tariffs, menu prices of certain items have increased”). Still, operators know there’s a limit – if prices go too high, diners will cut back. | emarketer.com

Consumer Response and Demand Shifts

Restaurants ultimately depend on consumer spending. With grocery bills rising and inflation persistent, diners may scale back frequency of eating out. As mentioned, surveys in early 2025 show many consumers plan to dine out less often if menu prices climb due to tariffs. | emarketer.com

We may see shifts in where people spend

Some consumers might trade down (from full-service restaurants to fast-casual, or from mid-tier to fast food) seeking cheaper meals. Others might choose to spend their limited dining-out budget on occasional premium experiences (a phenomenon noted as “barbell” dining patterns). 

The uncertainty around pricing could also change behavior – anecdotal reports say some patrons are more carefully reading menus for price changes and opting for less expensive items or skipping that imported wine bottle they might have splurged on before. Restaurant operators are thus not only managing costs but also trying to preserve the guest experience and value perception. If portions shrink or ingredients change, there’s a risk consumers notice a decline in value, which could hurt business in the long run. It’s a delicate balancing act: as one restaurant advisor put it, “the key to managing rising ingredient costs is flexibility and creativity…adjust menu pricing or portions to balance the bottom line, while maintaining the quality customers expect.” | fastcasual.com

Creativity and Flexibility is The Key

As the restaurant industry faces the challenges of rising ingredient costs due to tariffs, it’s important to remember that the most resilient operators are those who adapt with flexibility and creativity. The key lies in understanding consumer behavior and adjusting accordingly. While diners may become more price-conscious, this doesn’t signal defeat—it’s an opportunity to innovate. By finding a balance between cost management and maintaining the guest experience, restaurants can continue to thrive. Menu adjustments, local sourcing, and a clear communication strategy can turn challenges into triumphs, ensuring that customers continue to value the dining experience. In times of uncertainty, businesses that remain nimble, thoughtful, and committed to quality will not just survive—they will grow stronger, cultivating a loyal customer base that appreciates both the value and the experience they receive.

The Leverage Advantage

By providing our members with these insights, cost-saving strategies, and access to support and ancillary programs, we aim to equip them with the knowledge and resources they need to adapt effectively. With these tools in hand, they can navigate these challenges with confidence, ensuring sustainable success and growth in an ever-evolving landscape. If restaurants pass on higher costs to customers, menu prices may rise modestly. Many operators are working hard to minimize the impact. At the same time, absorbing too much of the cost can squeeze margins. Navigating this balance takes creativity and precision. The road ahead will require careful decisions, but it also presents a chance to rethink operations, improve efficiencies, and build greater resilience. With the right support, restaurants can stay agile and continue delivering value to the customers who count on them.