**Omaha**: The restaurant sector is under pressure from surging food prices, particularly in eggs, beef, and coffee, as global tariffs loom. Experts suggest that restaurateurs need to adjust their strategies and build robust supplier relationships to navigate the evolving landscape effectively.
The restaurant industry is currently navigating a tumultuous landscape marked by significant challenges related to food prices and supply chain dynamics. Bill Lapp, president of Omaha, Nebraska-based Advanced Economic Solutions, has highlighted several key issues that restaurateurs must address as global tariffs loom on the horizon.
Lapp points out that the prices of crucial commodities such as eggs and beef are under pressure due to factors including Avian Flu outbreaks and broader economic conditions. Additionally, the cost of coffee has surged dramatically, driven by supply shortages attributed to drought conditions in South and Central America.
In terms of coffee, Lapp emphasises the potential for weather conditions in Brazil to play a critical role in future supplies. While countries like Vietnam and Colombia contribute to the total U.S. coffee supply, the ongoing drought conditions pose serious challenges. Over the past two years, coffee prices have seen a dramatic increase, nearly tripling from $1.50 to $4 per pound.
As restaurateurs respond to rising costs, Lapp suggests that there may be a shift from Arabica to Robusta beans due to the latter’s reduced price point. He remarked, “For operators, it could be a fairly tricky proposition to make a change like that. Customers might not see or realise the switch immediately, but eventually they will and that could impact market share and/or brand appeal in the longer term.”
Egg prices also remain a concern, with Lapp indicating that instability is expected in the short term due to a reduction in the number of egg-laying birds within the supply chain. Approximately 120 million birds, equating to 6% of the population, have been culled. Breakfast-focused restaurants appear particularly vulnerable to these fluctuations, with Lapp noting, “If one segment of the industry is struggling more at present, it’s breakfast-centric operations. When you look at commodity prices, it appears that those restaurants—because of coffee and eggs—are perhaps the most challenged.”
Beef prices are projected to continue rising due to declining cattle inventories. Lapp reports that the total U.S. cattle herd at the start of 2025 is anticipated to be the smallest since 1951, marking the sixth consecutive year of decline. This reduction has driven the price of beef trimmings, essential for hamburger production, to approximately $3.80 per pound, reflecting an increase of around 30%.
The volatility extends beyond meat and eggs; produce prices, particularly for items such as avocados, tomatoes, and various fruits and vegetables, are also expected to remain unstable or rise, notably if proposed tariffs on goods from Canada and Mexico are enforced in April.
Contrastingly, certain dairy products, including milk, butter, and block cheese, are experiencing reduced prices and anticipated stability. Additionally, Lapp notes that lower gas prices could invigorate consumer travel and spending habits.
In response to these challenges, Lapp advises restaurateurs to secure long-term contracts with suppliers to mitigate the impact of potential price increases and shortages. He stated, “Take advantage of opportunities to establish long-term contracts to limit price increases and reduce the risk of shortages. Make sure to have good relationships with suppliers to ensure you lock in contracts that maintain supply at established prices. At the same time, stay open to re-engineering menus in case you encounter shortages or price hikes. It’s essential to be as flexible as possible.”
As the restaurant industry grapples with these complex economic conditions, flexibility and strategic planning will be paramount to weathering the storm ahead. The National Restaurant Association has underscored the significance of these ongoing challenges in shaping the future of the sector.
Source: Noah Wire Services
