UPDATE: Chicago coffee shop owner Michael Salvatore is sounding the alarm as tariffs and economic uncertainty force him to freeze hiring, cut jobs, and raise prices for customers. The founder of Heritage Hospitality Group, which operates several coffee shops and bars, warns that the current financial climate is as challenging as the COVID-19 pandemic.
In a startling revelation, Salvatore reported that prices for essential items, including coffee drinks, have surged due to rising costs across the board. Just weeks ago, he increased the price of a cappuccino from $4.50 to $4.75 and a 12-ounce drip coffee from $3.00 to $3.15. He anticipates that further increases will follow, affecting pastries and food menus as well.
“The uncertainty we’re facing feels like a hurricane,” Salvatore said. “Every day is a win or a loss, and you can’t run a business that way.” He emphasized the struggle to maintain operations while grappling with soaring costs for coffee beans, paper goods, and labor—most of which are exacerbated by tariffs on imports.
As inflation continues to rise, Salvatore’s team has had to make tough decisions. The coffee shop chain has implemented a hiring freeze and recently laid off staff to streamline operations. “We’re being extremely selective with hiring,” he explained, noting the operational changes made to cope with reduced profit margins.
Despite experiencing one of their best years in revenue, Salvatore lamented the thinning profit margins, stating, “Even with great revenue coming in, every line item in our expense sheet has gone up.” The economic landscape is forcing him to reevaluate how to keep his businesses afloat.
The impact on the community is significant. Salvatore, who founded the company in 2011, has always prioritized his customers and staff. “It’s always been about the people,” he said, reflecting on how his teenage son now works at the shop. Yet, the emotional weight of raising prices weighs heavily on him. “I don’t want to bombard everybody, but it needs to be done.”
Customers have mostly received the news with understanding, recognizing the broader economic pressures. Salvatore reported some regulars inquiring about price hikes and reacting positively after learning they were due to tariffs and cost increases.
Looking ahead, Salvatore plans to continue monitoring the situation closely over the next few months. “We’ll be reviewing items one by one and adjusting where necessary,” he said. The aim is to stabilize the business while navigating an unpredictable market.
As the coffee industry faces mounting challenges, Salvatore’s experience serves as a microcosm of the larger struggles many small businesses contend with today. With a cautious eye on the future, he remains committed to his mission despite the obstacles.
For those interested in the evolving situation, stay tuned for updates as Chicago’s coffee scene grapples with these pressing economic challenges.
