Operations

6 ways for fast casuals to offset tariff pain

Brands must recalibrate procurement, rethink value menus and re-engineer the back of house.

Photo: Adobe

April 16, 2025 by Sharmah Seakar — Senior Procurement Lead at Efficio, Efficio

The recent tariffs imposed by the Trump administration are expected to significantly disrupt U.S. food and beverage supply chains. As of April 2025, the US has imposed additional reciprocal tariff and universal tariff on all imported goods with a higher rate for selected countries.

The United States has imposed a cumulative 145% tariff on all imports from China, significantly impacting the food and beverage sector. This escalation stems from a series of tariff increases initiated earlier in the year, including a 10% baseline tariff in February, an additional 20% in March, and a 34% "reciprocal tariff" in April. These tariffs are compounded by existing duties under Section 301 and other trade measures.

While consumers will feel the pinch, the fast-casual dining sector built on margin-sensitive, high-turnover models are particularly exposed. With key imports like fresh produce, seafood, and alcoholic beverages facing dramatic price hikes, operators are being forced to make critical decisions, absorb the costs, redesign menus, or raise prices at the risk of customer pushback.

Impact on food and beverage imports

Seafood: Chinese seafood imports, such as tilapia and shrimp, are subject to the full 145% tariff. This has led to significant price increases, affecting restaurants and retailers that rely on these products.
Processed foods and ingredients: Items like canned fruits, sauces, and spice blends imported from China now face steep tariffs, leading to higher costs for food manufacturers and potentially higher prices for consumers.
Beverages: Imports of Chinese teas and other beverage ingredients are also affected, disrupting supply chains for specialty drinks and increasing costs for cafes and beverage companies.

Industry response

Businesses are exploring alternative sourcing options, such as suppliers from countries not subject to these tariffs, to mitigate cost increases. Some are also reevaluating their product offerings and pricing strategies to adapt to the new trade environment. The 145% tariff on Chinese imports represents a significant shift in trade policy, with wide-reaching implications for the food and beverage industry. Companies are advised to stay informed and agile in response to these changes.

The U.S. has imposed a 20% reciprocal tariff on all European Union imports, with an additional 25% tariff specifically targeting imported beer and empty aluminum cans. These measures have significant implications for the food and beverage industry, affecting both European producers and U.S. consumers.

Impact on European food and beverage exports

Beer and Aluminium Packaging

Scope of Tariffs: The 25% tariff applies to all imported beer, regardless of packaging type, due to its classification under aluminum derivative products. This includes beer in glass bottles and other packaging forms.
Affected Countries: Major beer-exporting countries to the U.S., such as the Netherlands, Ireland, and Germany, are significantly impacted. For instance, Germany's beer exports, including brands like Paulaner, face increased costs, potentially leading to higher prices for U.S. consumers.

Wine and Spirits

Tariff Implementation: A 20% tariff on EU wines and spirits is set to take effect, affecting imports from countries like France and Italy. U.S. wine retailers anticipate price increases, reduced shipments, and potential business disruptions.
Economic Impact: French wine and spirits exporters expect a sales drop of at least 20% due to the tariffs, with U.S. consumers facing higher prices for European wines.

Olive oil

Tariff Details: Spanish olive oil producers are contending with a 10% tariff, with the potential to increase to 25% within 90 days. Spain supplies 40% of the world's olive oil and exports around 180,000 metric tons annually to the U.S..
Industry Response: Companies like Dcoop, co-owner of Pompeian the top-selling U.S. olive oil brand, are considering expanding operations in the U.S. to mitigate tariff impacts.

Implications for U.S. consumers and businesses

Price Increases

Beer: The 25% tariff on imported beer is expected to raise consumer prices, with the U.S. importing over $7.5 billion worth of beer in 2024. Major suppliers include Mexico, the Netherlands, Ireland, and Canada.
Wine: U.S. wine retailers, whose inventories are heavily reliant on European imports, anticipate significant price hikes, potentially leading to decreased sales and business challenges.

Supply Chain Adjustments

Stockpiling: U.S. businesses have been increasing inventories of EU food and drink products to stabilize short-term supply ahead of tariff implementations.
Sourcing shifts: Companies are exploring alternative sourcing options, including domestic production and imports from countries not subject to the new tariffs, to mitigate cost increases and supply disruptions.

Strategic considerations

Diversification: U.S. importers may need to diversify their supplier base to reduce reliance on EU products subject to tariffs.
Cost management: Businesses should assess the financial impact of tariffs on their operations and consider strategies such as price adjustments, product substitutions, or operational efficiencies to manage increased costs.
Policy monitoring: Ongoing monitoring of trade policies and negotiations is essential, as tariff rates and affected products may change with evolving international relations.

Additional ingredients facing tariff-driven price increases

Fresh Produce

Tomatoes: With 99% of imported tomatoes sourced from Mexico and Canada, a 21% tariff on Mexican produce is projected to raise prices by over 50% — from $1.50 to $1.81 per pound. Brands that rely on tomatoes for pizza sauces, burger toppings and salsa bases will feel the squeeze.
Lettuce: Nearly all U.S. winter lettuce comes from Mexico. A 25% tariff could raise costs to $1.50 per head, directly impacting sandwich builds, salad sides, and value menus.
Avocados: A QSR darling, avocados are used across breakfast, lunch and snack menus. With 90% imported from Mexico, a 25% tariff could lift costs from $2.00 to $2.50 each, complicating guacamole recipes, toast builds, and bowl profitability.
Bell Peppers and berries: High-import items from Mexico, these ingredients are mainstays in health-forward offerings, smoothies and meal kits. Tariffs could increase prices by 20–30%, introducing volatility into supply and prep consistency.

Seafood

Salmon: With Canada supplying 96% of salmon imports, a 25% tariff could bump wholesale prices from $10 to $11 per pound. Fast-casual operators offering poke bowls, protein salads, or premium sandwiches will face cost escalation.

Beverages

European Alcohol: With potential tariffs of up to 200% on wines and spirits, cocktail programs and wine lists will suffer. A $40 bottle of Cognac could jump to $80 or beyond, squeezing mid-tier and fine-dining casual establishments.
Tequila and Beer: Mexico supplies over 60% of imported beer and nearly all tequila in the U.S. A 25% tariff could raise a six-pack's cost from $10.99 to $13.74, eroding profitability in bar programs and combo deals.
Coffee: The U.S. imports 99% of its coffee supply. The 10% universal tariff, coupled with higher rates for certain countries, has led to increased prices, prompting coffee shops to raise prices and reconsider sourcing strategies.
Eggs: Prices have surged by 53.6% due to a combination of tariffs and supply chain disruptions, posing challenges for breakfast menus and baked goods.

Operator Playbook: 6 ways to offset tariff pain

Source locally and seasonally; Work with regional growers, greenhouses and hydroponic farms to bypass import costs. Urban farms and CSA networks can offer reliable supply during traditional import-heavy seasons.
Rethink Ingredients and subs: Swap avocados for local spreads like seed butters or hummus. Replace tequila-based cocktails with U.S.-distilled agave or mezcal alternatives, and use domestic seafood options like trout or catfish to offset salmon price increases.
Protect your margins: Analyze contribution margins per dish and shift focus on items with local or domestic inputs, lower price volatility but high perceived value (e.g., build-your-own bowls) and use LTOs to rotate in substitutes and test consumer response.
Purchase in builk and simplify inventory: Secure contracts or bulk buys on non-perishable imports (sauces, oils, canned goods) before prices spike further. Streamlining SKUs can also reduce waste and holding costs.
Promote domestic Wines and craft spirits: Highlight local vineyards and distilleries. Consumers increasingly value transparency and sustainability use that to reposition your beverage program and retain profit margins.
Bring more prep in house: Central kitchens or trained prep staff can absorb tasks previously outsourced to imported products like sauces, dressings, spice blends and cocktail bases. This reduces dependency and gives brands more control over flavor, quality and cost.

Final thoughts: A market reset for restaurant profitability

Tariffs are not just an import tax, they are a menu disruption catalyst. With key ingredients becoming more expensive or volatile, brands must recalibrate procurement, rethink value menus and re-engineer the back of house. The brands that survive and thrive will be those that pivot quickly, partner locally, and use smart menu design to protect margins without compromising customer experience.

Sources:

Operations

About Sharmah Seakar

Sharmah is an experienced supply chain professional with a demonstrated history of working in oil and gas, freight forwarding, aviation/flight-catering and hospitality industry across government, semi-government and public listed organizations. With a Bachelor of Science in Supply Chain and Logistics Management from the University of Bolton, Sharmah is skilled in procurement, strategic sourcing, negotiation, category analysis and management, OS&E procurement, logistics, operations management, freight/shipping, transportation and project management.

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