Trump’s Policy Swings Threaten Higher Costs and Labour Shortages in US Consumer Foodservice

US consumer foodservice relies on undocumented workers and imported food. This makes it uniquely vulnerable to Trump’s promise to expel record numbers of immigrants and impose tariffs on US allies. Undocumented labour feeds the US: “from farm”, particularly in the meat processing and produce picking industries, where an estimated half to three quarters of all workers are undocumented, “to table”, where it is estimated that 12% of all undocumented migrants work in staff kitchens and front-of-house roles. Alongside this, entire sectors of US foodservice outlets are built on imported goods, not only fruits and vegetables but alcoholic drinks, seafood and coffee, as most domestic crop production goes to corn or soy and their derivatives. Should such policies go through – as they’ve disruptively swung back and forth – prices will surge and become a pass-through cost spread to consumers while labour scarcity constrains the supply side. As US consumers’ purchasing power is already strained, their spending at restaurants would quickly become untenable. 

Tariffs threaten existing supply lines along geopolitical boundaries 

An all-encompassing 25% tariff, suspended as of the time of writing, looms over the US’s single largest source of agricultural imports: Mexico. In response to the possibility of its enaction, major chained operators such as Chipotle have uprooted long-standing supply lines to hedge against the potential increase in the cost of input goods. They attribute up to 7% of their cost of goods to Mexican imports and have moved sourcing elsewhere to steel themselves for geopolitical instability while acknowledging it would be difficult to increase prices domestically. Without getting into the permissibility of climate and technical ability, there is simply no domestic replacement for the US’s free trade agreement under the United States-Mexico-Canada Agreement (USMCA) and imports will continue regardless of added premiums.

Imported agricultural products will be more expensive under tariffs, a cost which is ultimately paid by consumers. Euromonitor’s “Total Trump Agenda” Scenario Model projects a drop of up to nearly USD20 billion on the median household income band, a USD2,696 decrease in per household annual discretionary spending. This will not only be a supply-side squeeze but also limit the ability of consumers to spend outside the home. Foodservice operators will need to push greater value offerings to justify any price increases or indeed attract consumers to eat outside the home.

Deportations will be a constraint on labour and livelihood in consumer foodservice at large

The US restaurant industry is heavily reliant on undocumented labour. Undocumented labourers account for an estimated 40-50% of hired crop farmworkers and primarily support produce harvests – fruits and vegetables – which are hand-picked and consumed domestically, according to USDA. Further downstream, the Center for Migration Studies estimates that up to one million undocumented labourers staff restaurants across the country, while adjacent industries that support travel and leisure also rely heavily on undocumented workers. 

The Trump administration began deportations immediately following the inauguration and, unsatisfied with their progress, has moved to increase the operation’s efficiency. Guantanamo Bay, a US detention facility on Cuban soil, has been repurposed into a holding camp for mostly non-violent migrants, while geopolitical boundaries are being tested with a tentative agreement to ship people over to Salvadorean prisons. A shortfall of migrant workers will test the ability of the consumer foodservice industry to source enough labour to keep kitchens open, while further up the supply chain harvesting crops will become more demanding on labourers and more expensive.

Industry-wide cost increases are coinciding with consumers indicating they will be decreasing overall spending, a significant portion coming from “Visits to restaurants”. The US consumer is simply unwilling and, more importantly, unable to spend while inflation and other externalities have threatened their ability to put food on the table for years. 

Consumer foodservice to take a hit while independent operators bear the brunt

Navigating the actions of the Trump administration will be challenging. Independent operators may find themselves disproportionately affected by major disruptions – we can point to the 21,000+ full-service outlet closures that came from COVID-19 as an example of the effects felt by a universal supply chain disruption to the industry. With continual heavy inflation far from letting up, these issues continually smoulder in the US milieu.

The administration’s idea of tariffs as an elixir for a myriad of long-standing domestic and international issues is potentially snake oil; however, US consumer foodservice will find itself able to use several economic levers to raise funds. Experiential dining and loyalty programmes should see themselves refined as value adds so consumers may see reason to continue to enjoy the industry as they are able. Sustainability is inherently part of this industry – food waste is rampant and a cost that can be mitigated through local sourcing and circularity models as they become more prevalent.

Upstream, consumer foodservice operators will almost certainly need to diversify their suppliers and labour pool, perhaps sourcing from alternative routes in a similar vein to Chipotle expanding to South America and the Caribbean in the case of supply, or utilising alternative visa schemes such as H2 (non-agricultural, seasonal or high-demand temporary visas) or J1 (exchange students, summer work) to fill roles while being conscious that fiscal sacrifices may need to be made as a result of this two-headed impact on the industry. Import constraints and the absence of undocumented people will undoubtedly lead to small business closures, and shrink the affordability of food for consumers, complicating one of the US’s favourite pastimes of sitting down for a meal.

Learn more about how the US consumer foodservice market is innovating and preparing to meet challenges head-on in our newly updated for 2025 report, Consumer Foodservice in the US.