In the world of restaurants, the only certainty is uncertainty. That’s why in this episode of The Pre-Shift Podcast, we sat down with Jay Ashton, Canada’s Restaurant Guy, to talk all about tariffs and the uncertainty surrounding them
While this episode offers insights from a Canadian perspective, the advice is also relevant to restaurant owners in the United States. And the core lessons are timeless: how to manage escalating food costs, protect your cash flow, and prepare for the next round of economic uncertainty.
Listen to the episode
Meet Jay Ashton, Canada’s Restaurant Guy
Jay Ashton, also known as Canada’s Restaurant Guy, brings over 35 years of extensive experience to the food service industry. With a robust background in corporate food distribution, he has developed resources for some of the country’s top restaurant chains and worked extensively with thousands of independent restaurants.
In addition to his consulting work, Jay runs the Canadian Restaurant News channel and manages the Canada’s Restaurant Guy brand, consistently providing innovative solutions and insights for restaurants across the country.
Tariff concerns for the restaurant industry
The impact of tariffs has been at the forefront of everyone’s minds, especially those in the restaurant industry. Jay explains that ignoring the situation is not a solution: “We have to understand how bad they’re going to impact restaurants. Give or take, the average restaurant in Canada right now has about 30% of their products they bring in for their menu [being] impacted by tariffs in some way.”
He explains that while Canadian products will have less demand in the States because of the 25% tax, retaliatory tariffs placed on American products will also have a big impact. The impacts will be especially felt in the QSR market—so many products here are processed in the U.S. and then shipped up North.
“It’s not good for both sides. The demand—we want people using our products that are made up here and processed into the Canadian market. But there are also going to be critical decisions that have to be made for restaurants, independent, in the QSR model, or franchises.”
But he also highlights the silver lining in all of this: Canadians supporting Canadians. While the food cost uncertainty looms ahead, everyone is biding together by shopping—and eating—more locally.
The most at-risk products for restaurants
Jay calls commodity products high-risk: “As a restaurateur right now, your commodity products—you’re going to have to make some decisions on. And that’s going to be your high-volume [products].” While this varies from restaurant to restaurant, Jay points to proteins and produce as key categories to watch.
And then there’s also the ripple effect: products that aren’t necessarily taxed may still go up in price as an indirect result of tariffs. Jay cites the steel tariffs on U.S. imports from 2018 as a prime example. Back then, both washing machines and dryers went up in price—even though only washers were taxed.
Adjusting menus for tariffs
Many restaurant owners may also need to adjust their menus as certain foods become much more expensive than others. Jay offers a few suggestions, including salads without lettuce (yes, really) by incorporating Canadian grains instead. He also mentions protein alternatives as a key way to save costs—he once created a plant-based, “flex” burger with lentils, rice, and grains, in addition to animal protein, reducing costs by a whole 40%.
“We have to get innovative. And that is only done when we start playing in the kitchens again and start looking at products. I do this with the restaurants I work with: when we cost-sort the menu, we actually create a column called the ‘Why’ column.”
The ‘Why’ column is supposed to answer exactly that. Why do we use this ingredient? Why is it that size? Answering this question helps encourage restaurant owners to ensure every component of each dish offers value. “We tend to forget to ask that a lot. We tend to just do it because we’ve always done it that way. And we know it’s not good in our industry to say that.”
Jason also encourages using AI for menu engineering. It can help play with new ideas, critique existing work, and research your target audience.
Other steps to take to combat tariffs
Jay mentions there are still a lot of opportunities to make adjustments. “I always call it leg room. There’s still a lot of legroom in the P&L to make adjustments on your business—there are fixed costs and operational costs.” But his top recommendations come down to these two:
- Increase your cash flow by taking advantage of the guests coming to your business right now.
- Connect with your community by making it known to other locals that you’re around.
He adds to the power of community with one example: “When you say, ‘Don’t forget about our restaurant. We employ 250 Canadians in a restaurant—come and support us.’ I think that’s very powerful. We tend to always focus on the food, which is important, but we need to focus on the people. I think people connect us with people in these times.”
Jay also advises operators to store money in the bank, over the cooler—meaning, make sure you’re managing your inventory properly. “Cashflow is king. Your money is safer in the bank than it is in your dry storage or pile of stuff [you have] because you got a deal on it, sitting in the corner.” He compares this to literally having money with an expiration date.
The concept is similar to an emergency fund: “ You want your cash flow in the bank because if it does go south and no one goes out because we also have a consumer confidence problem coming up here—it’s already starting—you don’t want all of a sudden to have all your money tied up in inventory and your business goes out of business.” Or, on a smaller scale, if there isn’t enough foot traffic through the door, at least you have money in the bank to advertise.
The importance of tracking inventory
Jay adds that when it comes to tracking inventory, doing something is better than doing nothing. He calls this the napkin theory: “ If you have to use a bloody napkin to do stuff, do something, but have a plan, have a strategy, have a process, make it consistent, do it frequently. I don’t care if it’s the napkins—just have something so you can track it, trace it. There’s way too much going on in restaurants to keep your finger on the pulse without some sort of system.”
But while a napkin might work in a pinch, it’s also a metaphor for a simple solution—Jay recommends an Excel spreadsheet as one step up. “ You won’t believe how many people do nothing. And that’s what’s scary. You don’t want to be that.”
Should restaurants increase prices?
While Jay advises restaurants to be fully transparent about price increases, he also believes that most establishments have already hit their price ceiling—there isn’t much higher to go. Instead, other areas of the profit and loss may need to be evaluated—or profits may need to shrink a bit due to lower consumer confidence.
Jay feels that many operators see menu price increases as a first-hand solution, but he says, “I almost sometimes think that we might have to go there last—like that’s your last-case scenario. A lot of people go there first because it’s easy.”
He proposes a few questions to ask before opting for a price increase:
- Are we driving traffic with the menu?
- Are we driving experience with the menu?
- Can we make up the money back elsewhere?
- Can we innovate products and use other ingredients?
Diversifying revenue streams as a restaurant
Jay also adds that relying solely on food sales is too risky, and restaurant owners should have at least five streams of income: “ We’ve been doing this forever and relying on it as the one revenue stream to secure a business, to pay for stuff, to buy stuff, and employ people. It is too risky today to rely on one source of income. With the ability to use technology and the ability to create other revenue streams—it’s never been so easy.”
He compares this to a department store, where revenue is tied to multiple different sources, like the sale of food, furniture, and even tires. Beyond other forms of food sales, like catering and takeout, Jay offers three examples of ways to diversify restaurant revenue:
1. Newsletters and ad placements
Jay explains the idea of creating a regular newsletter for your customers based on addresses collected from birthdays and WiFi log-ins. This newsletter would inform guests about new offers and what’s happening at the restaurant. Then, you can sell ad placements within the newsletter to local businesses, such as pet stores or body shops.
For example, if you have a newsletter with 3,000 subscribers, you can approach other businesses to purchase ad placements at $500 each. Ten ad placements would generate $5,000 per newsletter.
Jay explains the potential impact: “Now, how much food do you have to sell at five grand with a 3 or 5% profit? A shwack of food, right? That’s a lot of food you have to sell. So now you don’t have to increase your menu prices or sell as much during a slow period or in the challenging situation we’re dealing with.”
2. Uber Eats as an e-commerce store
Jay also recommends leveraging Uber Eats as an e-commerce platform, not just a channel for takeout and delivery. ”So don’t use it necessarily as a delivery system. You can, but use it actually as a store now to sell other things—your CPG product lines, your clothing line, your new swag line. You can sell everything outside of your norm when it comes to food through Uber Eats.”
He recommends creating bundles with restaurant swag on the platform. For example, you can create a combo deal for a family meal that comes with three t-shirts or a water bottle. He adds, “ The best thing about it is that we always try to figure out how to measure marketing. Uber Eats gives you every tool to tell you if it’s a bad marketing idea based on your sales of those products.”
3. Social media influencing
Lastly, Jay mentions that restaurateurs’ credibility makes them a perfect candidate for social media influencing: ”That’s what counts when we look at selling stuff and working with stuff. So no matter the age, I think restauranteurs can be influencers, and I think they’d be phenomenal influencers, and companies will spend money with you and give you money to share and show your products.”
Final words of advice
Jay’s final words of advice are simple: “Don’t panic.” He cites the restaurant industry’s experiences with the COVID-19 pandemic, the housing crash, the 2012 oil industry disruption, and more. “We’ve been through so many things. The worst thing to do is freak out.” Above all else, he emphasizes the need to be proactive and “Have a plan before you get there.”
Resources
Jessica Ho, Content Marketing Specialist
Jessica Ho
Content Marketing Specialist
Hi, I'm Jessica, Content Marketing Specialist at 7shifts! I'm writing about all things related to the restaurant industry.
