Chef Andrew Gruel on Rising Food Costs and the End of the De Minimis Exemption

Impact of De Minimis Exemption Expiration

• 📦 The de minimis exemption, which allowed packages under $800 to avoid tariffs, has expired.
• 🇨🇳 This change is expected to increase prices on goods, particularly those from China, which accounted for 73% of de minimis packages.
• 📈 A minimum tariff of 10% will now apply to many imported goods, affecting online shopping.

Current State of Food Prices in Restaurants

• 📉 Chef Andrew Gruel notes that while food prices spiked significantly in 2021-2023 (up 19% from Jan 2021 to Jan 2025), they have seen a recent annual increase of about 1.7%.
• 🥚 Egg prices, which saw a substantial 16.4% year-over-year increase, have recently come down due to resolutions in avian flu outbreaks.
• 📊 Current year-over-year increases show food at home up 2.2% and food away from home up 3.9%, with meats up 5.8%.

Supplier Costs and Business Margins

• 💰 Restaurants and suppliers have been absorbing some costs, a practice that may have been cushioned by significant price increases anticipated during the pandemic.
• 🧐 There's a question of whether businesses are eating costs or eating profits, as some may have overcharged in anticipation of sustained high inflation.
• ⏳ Suppliers are reducing their long-term price increase forecasts, but consistency is needed for businesses to plan pricing 6-12 months ahead.

Restaurant Traffic Trends

• 📈 Casual and full-service restaurant traffic has been significantly up over the summer.
• 🍔 Fast-casual and quick-service dining traffic has reportedly decreased.
• ⚠️ The impact of the new tariffs and the upcoming school year will be key indicators for restaurant traffic in the next few months.

Challenges in Opening New Restaurants

• ⚠️ Despite increased traffic, opening a new restaurant is not advisable due to significantly elevated capital costs.
• 📉 Many restaurants that opened with PPP money have recently closed, creating opportunities for second-generation spaces but not a favorable overall climate for new ventures.