As the trade war continues, most restaurateurs are concerned with the current economic climate, and 70 per cent of restaurants are already experiencing tariff-related cost impacts. Recent research indicates that operators are most worried about food costs (86 per cent), tariffs (63 per cent), and the inability to increase menu prices (63 per cent).
What can operators do to try and mitigate the impact of the tariffs? While complete tariff avoidance may not be a possibility, Technomic offers some suggestions to help mitigate risk and continue to optimize the customer experience:
- Consult resources like the Harmonized Tariff Schedule and Government of Canada pages. This will give you an idea of the current state of affairs as things change and new tariffs are implemented. Knowing which ingredients may be impacted by the trade war can help target your ingredient purchases, your menu, and the level of cost increase.
- Work with your suppliers and purchasing partners to identify ingredient swaps that match your specifications. Going local can help Canadian businesses, limit supply chain delays, and help offset import costs.
- When passing on increases, try implementing changes in stages, if possible, to soften the blow. If you can, target a maximum of 2.5 per cent change at a time. Consumers know that costs are rising, but keeping traffic steady means avoiding significant increases.
- Wherever possible, find higher-value innovations that can justify a higher price point. Offering more perceived value will help customers better accept increases incrementally, as you maintain your margins the best way you can.
- Add even more value with propositions that reward loyalty and frequency from your guests. Customers are looking for new experiences and leveraging that demand with LTOs and creative offers could help offer better balance for diners and increasing costs.
- Stay informed by monitoring shifts in the tariff implementation and adjust strategies related to the above accordingly to best serve your customers and maximize your margins.
As the trade war continues to develop, operators will need to find a balance when looking to drive traffic, retain customers, and continue to build business.
