2025 begins, the hospitality industry is already facing a perfect storm of challenges. With new tariffs, supply chain disruptions, and a resurgent avian flu outbreak, businesses in the sector are being forced to adapt quickly. Rising costs, ingredient shortages, and regulatory shifts are threatening profitability at a time when many are still recovering from the economic strain of recent years. This is how the year is shaping up so far, and what businesses need to prepare for in the months ahead.
New Tariffs Driving Up Costs
President Trump has imposed steep tariffs on imports from Canada, Mexico, and China—key suppliers of essential food and beverage products for U.S. hospitality businesses. These tariffs are expected to ripple through the industry, increasing costs and forcing businesses to adjust their strategies.
Key Areas of Impact
Food Costs Rising: Key imports such as avocados (80% from Mexico), strawberries, orange juice, tequila, and beef will see sharp price increases, leading to higher menu prices.
Alcohol Price Hikes: The U.S. imports over $4.66 billion in spirits from Mexico and Canada, meaning drinks like margaritas and whiskey-based cocktails could become more expensive.
Equipment & Furniture Costs Soaring: Hotels and restaurants rely on imports from China for commercial kitchen equipment and furnishings, meaning higher costs for essential items.
Supply Chain Disruptions Worsening Shortages
Beyond tariffs, ongoing supply chain constraints are causing additional difficulties. Businesses that rely on global supply chains for food, furniture, and kitchen equipment are finding it harder to secure necessary products in a timely and cost-effective manner.
Key Supply Chain Challenges
Kitchen Equipment Delays: Refrigeration units, ovens, and dishwashers are experiencing extended lead times due to manufacturing bottlenecks.
Raw Material Shortages: Key components like drawer glides, desk chair bases, and lighting parts—90% of which are sourced from China—remain difficult to replace.
Hotel Furnishing Constraints: A lack of domestic production capacity for high-end furniture means hotels may struggle to complete renovations on time and within budget.
Avian Flu Impacting Poultry, Dairy, and Beef Prices
Adding to the turmoil, a major avian flu outbreak is further complicating the food supply chain, putting pressure on hospitality businesses already dealing with tariff-related increases.
How Avian Flu is Disrupting Food Supplies
Egg Price Increases: Reduced production has led to higher egg costs, impacting breakfast menus and baked goods.
Dairy Supply Challenges: Cases detected in dairy herds mean rising costs for milk, cheese, and butter.
Beef Price Spikes: Many dairy cows enter the beef supply chain, meaning shortages could drive up meat prices across restaurants and catering services.
What This Means for Hospitality Businesses
The combination of tariffs, supply chain bottlenecks, and avian flu will likely result in a challenging economic environment for restaurants, hotels, and other hospitality-related businesses.
Key Business Impacts
Menu Price Inflation: Restaurants will need to increase prices to offset rising ingredient and operational costs.
Limited Product Availability: Reduced access to key ingredients and supplies may require menu adjustments and alternative sourcing.
Higher Operating Expenses: Increased costs for food, equipment, and furniture could squeeze profit margins, especially for small businesses with limited financial flexibility.
How to Protect Your Business
To navigate these economic headwinds, hospitality businesses should consider the following strategies:
✅ Locking in Supplier Contracts: Secure pricing agreements now before further cost increases hit.
✅ Exploring Alternative Sourcing: Diversify suppliers and consider domestic alternatives to reduce reliance on tariff-impacted imports.
✅ Securing Fast, Flexible Funding: With costs rising, access to quick and flexible capital can help businesses manage cash flow gaps, invest in equipment, and adjust to market shifts without delays.
Get the Funding You Need
At Berkman Financial, we specialize in providing fast, flexible funding solutions tailored to hospitality businesses. Whether you need capital to manage rising food costs, purchase essential equipment, or sustain operations during economic uncertainty, we’re here to help.
Don’t let tariffs and supply chain disruptions hold your business back. Get the funding you need today—apply now and get approved in as little as 24 hours.
Contact Berkman Financial to discuss your options and keep your business thriving in 2025.
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