At Bati Ethiopian Kitchen in Brooklyn’s Bedford-Stuyvesant neighborhood, the menu centers injera, a large, sour, spongy flatbread, served with a variety of wat, stews made from meat, vegetables, and legumes.
“Ethiopian food is mostly long slow-cooked stews on the fire,” owner Hibist Legesse says. “You need a lot of onions for that.” But over the past few months, Legesse has watched onions getting pricier by the day. Though the price of onions have overall decreased from 2024 to 2025 by 27.2%, from June to November of 2025, prices have fluctuated month-to-month, according to the US Bureau of Labor and Statistics Producer Price Index Report.
It’s not just onions. Nearly every ingredient has gotten more expensive. The average price consumers pay for food purchases was 3.1% higher in 2025 from the previous year, according to the USDA’s Food Price Outlook.
Small cafés, bars and restaurants like Bati are struggling to maintain their margins as ingredient costs climb because of tariffs imposed by the Trump administration, rising inflation, and many other factors.
“As an ethnic restaurant, you can only charge so much,” Legesse says. “You don’t want to push away your customers like that. So we just keep our prices the same, and we eat the cost most of the time.”
According to the National Restaurant Association, wholesale food prices are 37% higher than before the pandemic. Legesse says the price of meat has increased the most. The wholesale price of beef increased by 15.1% while finfish increased by 31.6% since last year, according to the Producer Price Index Report.
Hema Agwu, co-owner of Brooklyn Suya, says he has seen a steady rise in protein costs. His restaurants serve suya, a grilled protein seasoned with a signature Nigerian blend of roasted peanuts and dried chiles over a bed of kale or rice topped with fresh vegetables. “Steak is super expensive. Salmon is super expensive,” he says.
Before the pandemic, Bati’s Legesse says her restaurant had a 6% to 7% profit margin. Today her margins hover at 5% because of ingredient price inflation, increased staffing, and higher insurance costs.
The NRA estimates to maintain that slim margin, the average restaurant would have to increase menu prices by more than 30%. Few independent business owners can risk that.
Agwu says he can’t raise prices without losing customers, so after a 10% profit hit, he’s focusing on developing new products.
“It forces you to grow,” he says. “We have to do more business to make up for it.”
In New Orleans, cocktail bar Cure founder Neal Bodenheimer also did not want to increase menu prices.
“We’re still a neighborhood bar,” Bodenheimer says. “We have to make sure that our pricing is fair and competitive.”
Bodenheimer says he’s adjusting portions, like one less deviled egg per platter or rearranging the measurements of a batched cocktail. “It’s like you’re in a recording studio and you’re turning the levels up and down on the master board,” he says.
Many of Cure’s products are imported—German beer, French cheese and Spanish Marcona almonds, which Bodenheimer refuses to substitute. He says some of the tariff burden is shared between the supplier and importer before it reaches the customer.
According to Expert Market’s 2025 Food & Beverage Industry Report, 60% of food and beverage professionals report being directly affected by tariffs, and 76% of businesses say rising ingredient costs affected profitability.
For Bodenheimer, there are no domestic equivalents to imported ingredients. “I want to select the best products and I want to serve them to my guests,” he says.
Jamila Wright, cofounder of Brooklyn Tea, imports teas from around the world to sell in her cafés and online store, but the combined effects of tariffs and rising shipping costs have made her operations increasingly difficult.
“Our oolong teas are now in flux, because Taiwan no longer ships to the US due to the high demands around tariffs,” Wright says. “That just changes our entire menu.”
Taiwan’s postal service suspended delivering commercial items to the US after the Trump administration ended “Duty-Free de minimis Treatment” in August. All imported goods valued under $800 would be subject to tariffs, according to an article by Reuters.
The additional costs means Wright would have to charge an extra $10 per ounce of GABA Oolong, raising the price of a five-ounce tin from $65 to $80.
“A large part of tea culture is storytelling and being able to name that tea estate or that village,” Wright says. “You lose a little bit of that magic when you have to go through a third party.”
Researchers from Kiel Institute for the World Economy analyzed over 25 million shipping transactions and found that American importers absorbed 96% of tariffs while foreign exporters absorbed only 4% of the tariff burden.
In Sacramento, Charley Phung, cofounder of Chloé Cà Phê, imports coffee and tea from Vietnam without a broker or importer. He says buying directly from producers has helped him absorb a 20% tariff.
“We’re actually saving a little bit because we’re buying direct,” Phung says. “But on top of us buying direct, a lot of our competitors are getting priced out of the market.”
Phung says he built his business throughout 2024 with the Trump administration’s tariffs in mind and priced his menu accordingly.
“We priced everything in a way where we don't have to raise costs,” Phung says. “Now all these other shops around us are adjusting after the administration raised tariffs. We just look like a regular shop.”
Wright says online orders helped Brooklyn Tea survive during the early days of COVID-19 and still serve as a major stream of revenue, helping offset the recent loss in profit.
“I actually don’t know how people do a stand-alone shop without online sales,” she says.
Wright has seen decreased demand in recent months because of how customers are modifying spending habits to deal with inflation. “People’s appetite for casual spending decreased,” she says. “More people are squirreling away their nuts right now.”