How are you dealing with impending tariffs or changes to the economy?

Rising costs for products and goods have been a consistent challenge for the restaurant industry in recent years. It has caused owners to closely examine their budgets and determine how they can offset the increased expenses. In June, food costs overall were up about 21 percent compared to the same month four years earlier, according to the Producer Price Index, which tracks the prices that businesses, including restaurants, pay their suppliers. It has led some operators to cut back in certain areas, increase their marketing and customer engagement, or offer additional LTO’s.

Like most businesses, restaurant operators will also deal with the financial challenges that will come from the reciprocal tariffs that were put in place earlier this month. The tariffs will see importers pay between 10 and 50 percent in the coming months on goods coming to the United States from foreign countries.

This issue forces restaurant owners to make a difficult decision – either absorb the costs themselves or pass them along to the customer, with the risk of losing their business. Beyond the immediate issue of rising food costs, increased prices on supplies and equipment also raise the question of the impact on potential future expansion. Franchise Update asked several multi-unit franchises how they are dealing with the tariffs and an uncertain economy. See their responses below for a variety of insights and strategies on how they plan on handling this issue.

Over the past year, we asked several other multi-unit restaurant franchisees if they changed their marketing strategy in response to the economy, and if so, how? Nearly every franchisee said they have increased their marketing efforts to bring in new customers, whether that was by promoting value-based meals, creating partnerships within their communities, or increasing third-party delivery services. Read the Franchisee Bytes below to learn more about how restaurant operators are responding to challenging economic times.

Albert Juarez

Company: Denco of Corpus, Inc.

Brands: 5 Wienerschnitzel  

Years in Franchising: 18

When it comes to economic shifts and the potential impact of tariffs, we approach things with a balanced mindset, both from the operational and guest perspective. Rising costs are a reality, especially when it comes to goods and supplies. Sometimes that means absorbing a portion of those increases instead of immediately passing them on to guests. You have to be realistic, and at the end of the day, you don’t have a business if your customers stop coming through the doors. It’s about maintaining trust, ensuring value remains clear, and making smart adjustments that keep the business sustainable while being fair to everyone involved: the customer, the team, and the bottom line.

Lucas Bergeson

Company: Mooyah Burgers, Fries, & Shakes of Wisconsin and Layne's Chicken Fingers of Wisconsin

Brands: 5 Mooyah Burgers, Fries & Shakes, 2 Layne’s Chicken Fingers  

Years in Franchising: 10

Our philosophy on tariffs, taxes, and wage increases is simple: if we’re feeling the pressure, so is every other restaurant. It’s also reassuring to know that the Mooyah supply chain team is proactive in planning for the future by putting contingencies in place to mitigate the impact of new regulations at the local level. We’re taking it seriously, focusing on controlling what we can and planning for the future as much as possible.

Bryan Paquin

Company: Three Alarm Subs dba Firehouse Subs

Brands: 8 Firehouse Subs

Years in Franchising: 19

To navigate economic challenges such as impending tariffs, we proactively monitor pricing and identify cost-saving opportunities, such as eliminating non-essential services like cable TV and pre-purchasing imported goods to mitigate cost increases. We collaborate closely with our franchisor, Restaurant Brands International (RBI), which provides valuable insights, technological advancements, and streamlined operations. RBI's marketing strategies emphasize value-driven promotions and limited-time offers (LTO's), enhancing franchisee profitability. Our approach prioritizes flexibility, enabling us to adapt swiftly to economic shifts and maintain operational efficiency.

Matt Davis

Company: The Davis Restaurant Group

Brands: 21 Honey Baked Ham  

Years in Franchising: 32

While day-to-day operations have remained relatively stable, the biggest impact of economic shifts and tariffs has been on the cost of building new locations. Tariffs on equipment and materials have driven up expenses, making it more challenging to open new stores. To mitigate this, we’ve started doing more comparison shopping and vendor vetting to find the best possible pricing.

Jake Alleman

Company: Cojak Investments, LLC

Brands: 6 Another Broken Egg Cafe

Years in Franchising: 17

Managing a restaurant through economic shifts takes planning and adaptability. We regularly evaluate costs and identify savings opportunities, whether it’s renegotiating with suppliers or exploring high-quality alternatives, to protect our margins without compromising quality. Partnering with our home office on a flexible pricing strategy has been key. Their support in monitoring market trends, availability, and pricing has helped us stay competitive. We’ve also expanded our revenue streams through catering and delivery, closely monitored cash flow, and built reserves to navigate the unexpected. By staying informed on economic trends, we’ve made smarter decisions around staffing, purchasing, and marketing, while keeping our business resilient and ready for what’s next.

Franchisee Bytes

Have you changed your marketing strategy in response to the economy? How?

Absolutely. It's hard to imagine how any business owner could answer otherwise, given today's economic pressures. Inflation has directly influenced how customers perceive value, and rising costs have forced us to adjust our pricing. To address this, we've doubled down on providing a premium experience that justifies the cost. Our marketing now emphasizes value in terms of pricing and the overall experience, from quality ingredients to exceptional service. We've also leaned into strategic promotions, bundling, and loyalty programs to remind customers of the benefits of sticking with us during tough economic times.
-Jacob Webb, Franchise Owner, MPUT Holdings LLC, 22 Marco's Pizza, 4 Tropical Smoothie Cafe

Yes. We took a grassroots approach and did our own local marketing. This allowed us to have a close relationship with the community and do things like spirit night for local schools and organizations, giving them a portion of the proceeds. We also set up and give away swag at local fairs and events.
-Jerome Johnson, Multi-Unit Franchisee, John Cove Management and Jbar Inc., 4 Sonic Drive-In, 10 Dunkin', 4 Baskin-Robbins, 1 Jersey Mike's Subs

We are running some value-based meals currently. We have a heavy emphasis on sports, both playing and watching.
-Chad Given, Brand President, Sizzling Platter, 361 Little Caesars, 107 Little Caesars Mexico, 185 Wingstop, 92 Jamba, 33 Jersey Mike’s Subs, 31 Dunkin’, 7 Sizzler, 5 Red Robin, 1 Cinnabon

Yes, we are starting to get more involved in our local communities and have hired a director of field marketing to make this happen. Our goal is to make our brand presence known in the communities in which we operate.
-Irfaan Lalani, CEO/Co-Founder, Vibe Restaurants, 76 Little Caesars, 60 Wingstop, 3 Whataburger

Yes, I've placed a greater emphasis on our marketing efforts and increased our budget allocated toward them. I did this so that we could take advantage of every possible customer interaction.
-Yousuf Nabi, Owner & CEO of Gotham IP Inc., Gotham Cookies Inc., DBA Mrs. Fields Cookies, 10 Mrs. Fields, 10 Sbarro, 4 TCBY

Yes, we have increased our focus on third-party deliveries and online business to increase our reach.
-Phong Huynh, Co-Owner, Fuego Investment Inc., 30 El Pollo Loco

Yes, we have. Some of our brands have shifted toward a value-based approach while others have focused on menu innovation paired with robust marketing techniques. The latter has proven to be more effective.
-Mike James, Founder/Managing Partner, Guernsey Holdings, 122 Sonic, 20 Zaxby's, 3 Take 5 Oil Change