UPDATE: Chicago’s coffee and bar scene is in turmoil as tariffs and economic uncertainty force local businesses to raise prices and freeze hiring. Michael Salvatore, the owner of Heritage Hospitality Group, announced critical operational changes that could reshape the local hospitality landscape.
Just weeks ago, Salvatore implemented a price increase across his five brands, including Froth and Heritage Bikes & Coffee. A cappuccino now costs $4.75, up from $4.50, and a 12-ounce drip coffee has risen from $3.00 to $3.15. This 5% average increase is a strategic response to soaring costs driven by tariffs on imported goods, labor, and inflation.
“This is starting to rival the challenges we faced during COVID,” Salvatore stated, highlighting the growing pressure on margins. Tariffs on coffee and various essential supplies are squeezing profits, forcing him to make tough decisions.
The uncertainty surrounding tariffs, political climate, and labor shortages has led Salvatore to freeze hiring since late September. “We’re being extremely selective. There are a few specific roles open, but we’ve halted active recruiting across the company,” he explained. This decision comes despite experiencing one of their best revenue years, revealing a disheartening truth: increased sales do not guarantee profitability.
Salvatore has already cut back on staff, reducing operational roles and streamlining shifts to adapt to the thinning margins. “We implemented a hiring freeze due to tariffs and economic uncertainty broadly. It’s like operating in a hurricane,” he lamented.
Food and beverage prices are not the only concern. Salvatore also mentioned the rising costs of essential supplies like cups and paper goods, which are heavily impacted by global supply chain issues. “Nothing’s manufactured in the States,” he emphasized, pointing to the global economy’s influence on local business operations.
As the slow season approaches, Salvatore remains cautious. “Every day is a win or a loss,” he said, indicating the fragile state of his business. He plans to review prices on additional menu items over the next two months, assessing where the greatest margin hits occur.
Despite the challenges, Salvatore maintains a connection with his customers, with his own teenager now working at the shop. “It’s always been about the people,” he said, expressing his commitment to the community. As local coffee lovers adjust to the new prices, many are understanding of the situation. “People generally understand that everything is getting more expensive,” Salvatore noted.
The immediate future remains uncertain as Salvatore and his team strategize to navigate this turbulent economic landscape. “I’m not necessarily going to have to take out loans or anything. We keep track week to week,” he reassured, though he acknowledged the road ahead will be challenging.
With prices rising and hiring frozen, Michael Salvatore’s story is a stark reminder of the pressures facing local businesses today. As tariffs and inflation loom large, the hospitality industry in Chicago must adapt quickly or risk falling behind.