‘You wake up waiting for the bomb to drop’: Looming tariffs threaten local restaurants, food businesses
Tariffs trickle from the government to consumers like a ball pinging down a Plinko board, hitting multiple businesses. Restaurants may be forced to change, raise prices or close.
Jeffrey Dalfonso opened Dalfonso’s Italian Imports in the Five Points neighborhood to bring Italy to Buffalo through imported groceries and mortadella- and mozzarella-loaded sandwiches. It’s Italian in spirit, too – the kind of business where you walk in for a few quality ingredients, a quick espresso and a chat with the owner who lives in the community.
It’s also the kind of small business that will be most affected by President Trump’s recent round of tariffs.
“That’s one of those tough things to say out loud,” Dalfonso said. “It could definitely shut me down.”
Trump has applied a 10% tax on most international imported goods. He also sparked a trade war with China. Other tariffs were proposed this week quickly paused, leaving businesses both relieved and reeling.
Tariffs trickle from the government to consumers, hitting multiple businesses along the way. Not only will prices go up at your favorite restaurant, wine store or cheese shop, but some businesses may be forced to change or close.
Business owners also don’t know when or what to expect. They say the uncertainty is stressful.
At one point in the last week, it looked like European wine would be subject to a new 200% tax. “Any sort of price increase is going to be tough for people to sustain, especially small stores like mine,” said Justine Powers, owner of Elmwood Village wine store Funk and Fermentation. She couldn’t “fathom” that kind of price increase.
“With food specifically, I would be very confident saying, ‘No, there’s really not any upside for the restaurant business here in Western New York,’ ” said Scott Laing, an assistant finance professor at the University at Buffalo.
Uncertainty abounds
Local restaurant owners are struggling to plan and cope with the recent economic volatility.
“Every day, you wake up waiting for the bomb to drop,” Dalfonso said. “It would almost be better if they flat-out said, ‘These are going in place Friday,’ instead of trying to plan for something that you can’t plan for.”
Profits are slim in the restaurant industry and have only grown skinnier in recent years.
“We’ve seen inflation just run rampant for so many years following the pandemic. Even with the pandemic, we saw reductions in workers being available. We saw a decline in patrons visiting restaurants, and minimum wage keeps going up, specifically in New York, and it’s tough to hire good, quality workers,” UB’s Laing said. “It’s hard to be competitive. The restaurant business is really tough to be in.”
Tariffs increase the price of imported ingredients at restaurants. Restaurant owners will choose whether to raise menu prices or let the price hike gnaw into their profits.
Dalfonso may add $1 or $2 to many of his items, including his sandwiches, to cover some of the added costs. Rikki Terrance, a sales representative from Nomadic Distribution, which sells wine to Funk and Fermentation, said prices won’t increase for April, but businesses could expect “about a $1 increase on every single bottle” in May with the recent tariffs.
“I’m not trying to get rich,” Dalfonso said. “I just want to pay my bills.”
With tariffs, the first person to feel the price jump is the importer, who pays the tax. They likely pass it along to the next guy: the distributor. The distributor decides whether and how much to absorb the price increase, before passing it down to the next guy: the business owner.
At the very bottom, the customer feels the impact the next time they pick up a favorite bottle of wine or visit a restaurant and discover their menu is a little less adventurous and a little more expensive.
The price increases prompted by the tariffs are likely to stay, even if the tariffs are lifted, Laing said, because restaurants will be concerned about their possible return.
“The unknown is the scariest part,” said Jessica Forster, co-owner of Waxlight Bar à Vin, a Black Rock restaurant with a James Beard-nominated wine and beverage program. “This back and forth with the tariffs and the market, it makes people uneasy to spend their money, and that includes our guests but also us. We don’t know how much we should be buying or not buying.”
Waxlight will need to charge more for its wine once the tariffs’ price impacts begin rippling through the market. High tariffs, such as the once-proposed 200% tariff on imported wine, would cause Forster to rethink their celebrated wine list.
“The biggest loser is going to be American wine consumers and the wine culture because it’s built on this huge network of small businesses, wine producers, importers, distributors,” Forster said. “It’s just going to hurt our options and the diversity of what we can offer.”
Menus, prices in flux
At Las Puertas, a small and upscale Mexican restaurant on the West Side, chef and owner Victor Parra Gonzalez does a delicate dance.
A restaurant owner since 2014, Gonzalez has tweaked his business model to maximize flexibility and adapt to customers’ wants. Going out to dinner isn’t enough of an experience to lure customers anymore, so Gonzalez transformed his dinner service into an event. You must reserve your spot and pay a fixed price of $100 for a six-course meal. His team explains each dish to you while you eat, offering a tale of the dish’s inspiration, history and ingredients.
Gonzalez has already changed his menu based on the tariffs. He uses a lot of internationally imported ingredients, especially from Mexico, which has been an on-again, off-again tariff target. He removed mole, a 36-ingredient chile sauce with 15 ingredients that he expects to jump in price with the tariffs. He worries he’ll be unable to use other key Mexican ingredients, such as huitlacoche (a type of corn fungus similar to black truffle) and guajillo chiles because they’ll be too expensive.
“Every little cent counts when it comes down to paying your team,” Gonzalez said.
There’s another person in the dance: the customer. Gonzalez can’t charge any more money to his customers, especially when he’s already noticed a dip in restaurant attendance.
Peter Herman, owner of Elmwood Village café Tipico Coffee, agrees. He’s been grappling with a major increase in the price of wholesale coffee beans because of weather-damaged crops. The tariffs will be yet another cost that will cut into his profits, at a time when he’s also seen a decrease in café traffic.
“You don’t know what’s sustainable until the customer stops showing up,” Herman said. “If folks don’t feel as though they have the extra money to go out and treat themselves, they’re going to opt to stay home.”
Amabel Provisions owner Julian Dell’Oso has no choice but to charge his customers more for his cheeses and small-batch pantry items. More than 70 foods that he sells will be directly affected by tariffs. He may stop carrying various cheeses and foods from independent producers because they’ll be too expensive. It would bend his store’s mission, “but if it means staying open, I’d rather have something that somebody can afford than stick to some idea.”
“We’re already just getting by,” Dell’Oso said. “So something like this really could impact us in a very serious, negative way.”
When the choice is between buying fancy cheese and paying the electric bill, you aren’t choosing the cheese. But, when you are buying cheese for a picnic, or wine for a party, or a sub for lunch, local business owners feel the sales more than chain stores with much deeper pockets.
“I do really worry that Buffalo, but America in general, will just be one giant Times Square of corporate things and corporate places,” Dalfonso said. “All of our uniqueness and flavor that makes America the great melting pot is going to be gone.”
