I run coffee shops and bars in Chicago. Tariffs and uncertainty forced me to freeze hiring, cut jobs, and raise prices.

• Michael Salvatore has had to make some business changes due to tariffs and uncertainties.
• He has raised the price of coffee drinks and will evaluate whether other items need to be changed.
• While COVID was a hard time to operate, he thinks this period rivals that.

This as-told-to essay is based on a conversation with Michael Salvatore, 44, the founder of Heritage Hospitality Group, a company with a few bars and coffee shops in Chicago. The following has been edited for length and clarity.

I own Heritage Hospitality Group in Chicago, and we’ve been around since 2011. It started as a bicycle manufacturing company, and I paired that with a café. I did that for a few years as I pursued my interests throughout the hospitality industry. We now have five different brands: Froth, Heritage Outpost, Heritage Bikes & Coffee, Larry’s, and Bunker.

I love the customers. I love solving the problems that arise. I love experimenting with food. I love coming up with new drinks. I love my employees, and the interactions I have with everybody I get to work with.

How have tariffs or other factors affected your business? Reach out to this reporter at [email protected].

My teenager is now working at the shop as a dishwasher. That’s so fun to see. We started this company when he was several months old.

It’s always been about the people, it’s always been about the hospitality, and that keeps me going. I love it.

COVID was one of the hardest points in my life operating a business. Everything was uncertain, and everything was shut down. We paused, we took a break, and figured it out.

Now, it feels like everything’s uncertain, but no one’s giving it the attention it needs. The current moment with inflation and policy uncertainty is starting to rival running a business during COVID.

It feels like tariffs are hitting almost every aspect of the business

Any bicycle parts, anything coming from overseas, that’s getting hit, whether it’s tariffs or lack of inventory at this point, because the wholesalers don’t have it either. Coffee bean prices have obviously gone up. Tariffs on South America, Brazil in particular, have carried that weight of the tariffs.

Even things like cups, paper goods, anything that we rely on — essentially, nothing’s manufactured in the States. It’s a global economy, so everything gets hit.

The biggest issue is not knowing what is going on. You can’t operate a business with uncertainty.

Every day is a win or a loss, and you can’t really run a business that way. This uncertainty creates this temperature where I’m going to hold off on any major decisions because I don’t know how that’s going to affect my bottom line tomorrow.

The uncertainty stems from a few factors. It’s tariffs, it’s political, it’s immigration, it’s labor. We’re going into the slow season. That’s going to be uncertain. I’m frozen for at least six months.

It’s like we’re operating in a hurricane with all these things flying in our faces, and we’re just trying to make sure that the kitchen’s open and the coffee’s warm.

We just raised prices a few weeks ago, although I didn’t want to

Tariffs are a key reason. But we’re also raising prices due to across-the-board cost increases: labor, insurance, coffee, paper goods. Everything is up. Tariffs were the tipping point.

We’re raising prices in stages, starting with coffee. Next, we’re looking at pastries, packaged drinks, and eventually our food menu. We’re reviewing item by item over the next two months and adjusting where the margin hit is greatest. We’re not taking a blanket approach — it’s strategic and staged.

At Froth, we raised the price of a cappuccino from $4.50 to $4.75. A 12-ounce drip coffee went from $3.00 to $3.15. A cold brew went from $4.75 to $5.00. At Heritage Bikes & Coffee, a cortado went from $4.25 to $4.50. Most changes were in that 5% range, rounded up.

I don’t want to bombard everybody, but it needs to be done. Right now, we are just increasing prices on coffee drinks, where we lost a ton of margin, and I needed to recoup some of that. So that’s where the first step was. We’ll continue to do that throughout the next few months and slowly but surely raise prices where it makes sense.

Raising prices is really hard for me. It’s been years since I’ve done that for coffee. It needed to be done because I see that we’re making more revenue, but we have less margin for any profit to pay our folks.

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. Growing up, we didn’t really go out of our way to go out to coffee or go to the local restaurants. So I know how special that can be. I’ve always wanted that to be within striking distance of most people.

We debated announcing the increase widely by email, but ultimately decided to explain it directly when asked, which felt more aligned with how we do things.

Reactions have been surprisingly quiet. Most people haven’t noticed or haven’t said anything. A few regulars asked about the change, and when we explained it was tariff and cost-related, they nodded and moved on. I think people generally understand that everything is getting more expensive.

When I look at what our margins are and how thin they’ve become in order to operate, I’ve had to raise those prices.

We’ve had to make some drawbacks on staff

We cut staff in September due to tariffs, but also to streamline operations in response to thinning margins.

There are some key points where we thought we could run more efficiently. Our margin for labor, it should be a certain point, a certain percentage of your income. We couldn’t meet that.

We made operational changes focused on efficiency — eliminating overlapping shifts, reducing prep cook hours, and cutting a few key middle-management roles like kitchen manager, events, and social media.

I’d love to be able to have someone on social media and marketing. It would help business, but I don’t think it would help it enough to make up for their salary at this point.

We implemented a hiring freeze in late September due to tariffs and economic uncertainty more broadly. We’re being extremely selective so while there may be a few specific roles open (like event-based or part-time), we’ve halted active recruiting across the company.

Despite having one of our best years in terms of revenue, our net profit is smaller

People are coming in. People are buying. Even with that, even with great revenue coming in, because coffee prices went up, because paper goods went up, because labor went up, because insurance went up, every line item in our expense sheet has gone up.

When you’re operating at thin margins as it is, those matter hugely. So if you’re talking about every expense that’s gone up throughout your QuickBooks account, no matter how much revenue comes in, unless you have an incredible year, you can’t keep up with the expenses unless you raise your prices.

As a group, as a management, we talk about finances weekly. We’re planning for those slower months, making sure that we are realistic about the hours we can provide for our staff. We’re realistic about what we can offer, what we can buy, just trying to run a skeleton operation until we understand where the other side of this is. I’m not necessarily going to have to take out loans or anything.

I always try to operate within our revenues. As long as we can do that week to week, we keep track of what’s going on week to week, we make sure we’re running cost of goods, labor within line of a certain formula, we’ll be OK. But it’s going to get thin for sure.

How have tariffs or other factors affected your business? Reach out to this reporter at [email protected].

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