Restaurants See Ingredient Prices Drop
According to research by Plate IQ, restaurants are actually seeing prices for ingredients fall due to the recent tariffs and oversupply.
The restaurant invoice management company processes tens of thousands of invoices across the United States each day. They collect a lot of data about what restaurants are buying, how often, and for how much.
“We’ve always been curious about how restaurants’ food costs are impacted by commodities markets. When President Trump’s tariffs made headlines, we saw an opportunity to analyze what the market is really doing, in real time. Just as important, though, we used that historical data to predict how the trade war will shake out for restaurants,” according to the company’s report.
Plate IQ used nationwide data collected from over 2 million restaurant invoices from July 2017 to July 2018, focusing on eight items commonly purchased by restaurants that have been hit by tariffs: yellow corn, apples, potatoes, pork, crabmeat, pollock, haddock and tuna.
“Generally, produce prices have been trending down since March of this year. The combination of a good growing season and international tariffs imposed by countries that often import these products resulted in a surplus that should benefit restaurant operators,” reports Plate IQ. “In contrast, seafood prices are trending upward due to higher import duties.”
Final Thoughts
This may sound like good news for some restaurants. However, if tariffs lead international buyers to look elsewhere for U.S.-produced commodities like meat and produce, farmers attempt to recoup their losses by charging higher prices to distributors, costs that will no doubt get passed on to restaurants.
Likewise, tariffs on steel and aluminum could hit restaurants hard in two ways: First, canned food prices could escalate as manufacturers pass rising costs on to purchasers.
Second, foodservice equipment could get more expensive. Copper, aluminum, and steel prices have grown by 30% or more since 2016, making additional tariff-related price hikes a painful prospect.
And, of course, consumers could start feeling a pinch, whether from paying more for regular purchases or due to slower economic growth that results in fewer jobs and stagnant wages. That outcome could mean disaster for restaurants, which profit when customers feel confident about their finances.
You can read the full Plate IQ report here: