How could foodservice operators adapt in a heavy tariff environment? Why is the doggie bag in the doghouse? Which chain is embracing ghost kitchens? How is bar design evolving? Answers to these questions and more This Week in Foodservice.

Less than four months into the year the business environment for foodservice operators seems to be becoming increasingly complex thanks to a variety of factors, including tariffs imposed by the Trump administration, sinking consumer confidence and continued labor pressures, which saw eating and drinking places lose a net 25,500 jobs in during the first quarter of 2025.

Assuming the tariffs stay in place for a year but not taking into account any reciprocal tariffs on U.S. goods, The Conference Board projects U.S. real GDP growth may decline by 1.2% in 2025 and global GDP growth may be 0.5% lower over the same period. The Conference Board also warns that U.S. personal consumption expenditure inflation could be 1 percentage point higher in 2025.

As a result of all this economic upheaval and uncertainty, Goldman Sachs now pegs the likelihood of a U.S. recession at 45%, per a Reuters story shared by Yahoo! Finance. The same story says J.P. Morgan puts the odds of a U.S. and global recession at 60%.

The foodservice industry is likely to be among the first to feel the impact of the Trump administration’s tariffs, given that so much of the fresh produce it uses comes from other countries, as this story from Barron’s points out. That will likely lead to higher menu prices in the near term, something neither the operator nor the consumer wants.

“Restaurant operators know consumers are very sensitive to costs and have kept menu price increases to 30%, while their food costs have gone up 40% in the last five years,” said Michelle Korsmo, president and CEO of the National Restaurant Association, in a statement issued April 2, 2025. “Restaurant operators rely on a stable supply of fresh ingredients year-round to provide the menu items their customers want and expect. Many restaurant operators source as many domestic ingredients as they can, but it’s simply not possible for U.S. farmers and ranchers to produce the volumes needed to support consumer demand.”

If such strong economic headwinds come to fruition, many operators may soon find themselves just trying to keep their existing customer bases from eroding instead of trying to grow their businesses. “By the end of 2024, the number of U.S. consumers reporting to have cut back on eating and drinking out on social occasions was two percentage points below the global average at 27%,” says Hannah Cleland, a senior consumer analyst at research firm GlobalData. Cleland was citing data from a study the organization fielded during the fourth quarter of 2024. “Operators will be focused on preventing that figure from growing further due to rising costs and potentially falling service and quality standards.”

So, what’s next for operators, at least in the short term? “These new challenges point to a wider need for operational overhauls in foodservice to improve overall efficiency and minimize cost pressures long-term,” Cleland says. “Blanket tariffs will affect prices of all goods and potentially create shortages as rising prices create delays at ports and weaken demand and supply of goods. However, a more diversified supply chain, both in terms of suppliers and ingredients can cushion the impact. Additionally, there has been a marked increase in automation technology investment in the U.S. to cope with increased labor costs.

“That said, these changes, while necessary, are not short-term fixes for foodservice,” Cleland continues. “Rising prices for less value will be a hard pill for consumers to swallow when dining out. Operators will have to be transparent about the reasons behind price increases and changes to service to soften the blow to customer wallets.”

The good news is that over the past five years or so, the foodservice industry has proven to be quite creative and resilient. Those traits will continue to serve the industry well, particularly in the face of such uncertainty.

Foodservice News

• Portillo’s plans to enter another daypart. The iconic Chicago-based chain will start to test breakfast service on April 15 at select locations, per a Restaurant Business story. The chain began teasing this development via its social media channels. The move comes on the heels of Portillo’s reporting a 3.7% decline in transactions during its most recent fiscal fourth quarter.
• Ghost kitchens remain a key ingredient in Marco’s Pizza’s recipe for growth. Using ghost kitchens allows the chain to open stores in certain markets at a fraction of the cost of a regular unit, Gerardo Flores, the company’s chief development officer, told QSR Magazine. Marco’s Pizza recently opened ghost kitchen locations in Cleveland, Denver, and Austin.
• Ever wonder why so many full-service chains seem to flock to the suburbs over urban areas? Some reasons include high rents, difficult buildouts and space limitations, per a Restaurant Dive story. Despite these challenges, some concepts continue to make a go of it in urban areas. The story points to Ruth’s Chris Steakhouse and Morton’s Steakhouse as two such examples.
• Are declining alcohol sales impacting bar design? Yes, according to 52% of restaurant development + design readers who said their designs are evolving to include a greater emphasis on the bar area. And 11% said that bar size is shrinking in their designs to reflect the declining popularity of booze.
• Leftovers are being left behind. The venerable doggie bag is becoming a thing of the past, especially in New York, a victim, in part, of the ease with which a fresh meal can be ordered online and delivered, despite complaints about the economy, per a report from The Food Institute. This could signal a generational shift of sorts, as boomers were taught to clean their plates while younger generations tend to focus more on the experience.
• Mid-sized coffee chains are gaining market share, per data from Placer.ai. The company’s report, “Coffee Visits: Perks in The Segment” finds that between 2019 and 2024, mid-sized chains saw their share of visits increase almost 7%, while Starbucks and Dunkin’ visits have declined 8%.
• Commercial foodservice plumbing equipment manufacturer Klarco opened a production facility in Aviano, Italy. This move consolidates Klarco’s operations from five separate sites in the San Quirino industrial area into a single plant, which the company believes will enhance productivity, sustainability, and employee well-being. Klarco is part of T&S Brass.

Economic News

• The U.S. economy added 228,000 jobs in March, the U.S. Bureau of Labor Statistics reported. This is up from 117,000 in February and greater than the Dow Jones estimate of 140,000, per CNBC. The unemployment rate came in at 4.2%, which is 0.1% greater than analysts had projected. the BLS.
• Private sector employment increased by 155,000 jobs in March, according to the March ADP National Employment Report. This is 35,000 jobs greater than what Dow Jones economists had projected, per a CNBC story. “Despite policy uncertainty and downbeat consumers, the bottom line is this: The March topline number was a good one for the economy and employers of all sizes, if not necessarily all sectors,” said Nela Richardson, chief economist, ADP. The leisure and hospitality sector added 17,000 positions.
• Initial jobless claims decreased by 6,000 for a total of 219,000 for the week ending March 29, 2025, per the U.S. Department of Labor. Analysts had projected 220,000 claims, per the Associated Press. The 4-week moving average was 223,000, a decrease of 1,250 from the previous week.
• Job cuts by U.S.-based employers increased by an eye-popping 60% in March, per the latest data from Challenger, Gray and Christmas. The 275,240 announced job cuts are 205% greater than those announced in March 2023. This is the third highest monthly total ever reported. The highest monthly totals happened in April 2020 and May of 2020. To nobody’s surprise, job cuts announced by the Federal Government played a significant role in driving these claims. Over the last two months, DOGE actions have been attributed to 280,253 layoff plans of federal workers and contractors impacting 27 agencies, according to Challenger tracking. Another 4,429 job cuts have come from the downstream effect of cutting federal aid or ending contracts, impacting mostly Non-Profits and Health organizations.
• The NFIB Small Business Index declined 3.3 points in March, leading to a score of 97.4. This is slightly less than the study’s 51-year average of 98. “The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months. Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them,” said Bill Dunkelberg, NFIB chief economist.
• New orders for manufactured durable goods increased 0.6% in February, per data from the U.S. Census Bureau. This is 1.2% less than January’s growth rate.