UPDATE: Chicago coffee shop owner Michael Salvatore announced urgent changes to his business amid rising tariffs and economic uncertainty, leading to immediate price hikes and staff cuts. His company, Heritage Hospitality Group, is feeling the pinch as inflation continues to impact costs across the board.
Salvatore confirmed that the price of a cappuccino has surged from $4.50 to $4.75, while a 12-ounce drip coffee now costs $3.15, up from $3.00. These adjustments come as the hospitality industry grapples with unprecedented challenges, making this period comparable to the struggles faced during the COVID-19 pandemic.
“It feels like everything’s uncertain, but no one’s giving it the attention it needs,” Salvatore stated. He highlighted that tariffs on imported goods—including coffee beans and packaging materials—are significantly impacting his operations. The uncertainty surrounding supply chains has led to increased costs for essential items.
“Every day is a win or a loss,” he lamented, noting that the unpredictability of the current economic climate has forced him to freeze hiring and cut staff. In September 2023, he implemented a hiring freeze due to these ongoing challenges, further streamlining operations to cope with thinning margins.
“It’s like we’re operating in a hurricane with all these things flying in our faces,” Salvatore added, emphasizing the difficulties faced by small business owners in today’s economy.
Since the company’s inception in 2011, Salvatore has expanded his brand to include five different establishments, including Froth and Heritage Bikes & Coffee. Despite having one of his best years in revenue, he warned that net profits have shrunk due to escalating costs. Labor, insurance, and coffee prices have all risen, forcing him to pass some of these costs onto customers.
“Raising prices is really hard for me,” Salvatore admitted. “I have a hard time raising prices on my customers, who come in and spend their money on a coffee, bike, service, beer, or food.” He described the emotional impact of these decisions, noting that his goal has always been to keep quality hospitality within reach for everyone.
As the industry braces for slower months ahead, Salvatore is evaluating prices on a case-by-case basis. “We’re reviewing item by item over the next two months and adjusting where the margin hit is greatest,” he said.
The response from customers has been largely muted, with many understanding the necessity for price adjustments in light of rising costs. “A few regulars asked about the change, and when we explained it was tariff and cost-related, they nodded and moved on,” he noted.
With the ongoing impact of tariffs and inflation, Salvatore is cautiously optimistic about navigating through this turbulent time. He remains committed to operating within the company’s revenues and hopes to stabilize operations as conditions improve.
As the situation continues to develop, Salvatore’s story serves as a poignant reminder of the challenges that small business owners face in an increasingly complex economic landscape. Stay tuned for further updates on how tariffs and economic policies are affecting local businesses across the nation.
