According to Alignable, 41% of small restaurants were unable to make rent in May, a figure no doubt impacted by the fact that the cost of rents increased for 52% of small businesses. Although shocking, this unfortunate situation was not unpredictable or even new. In 2021, Alignable revealed that 45% of restaurants did not have the funds to cover their August rent. And as early as June 2020, The Washington Post warned that rent defaults could plague businesses in the age of COVID.
While inflation drives up the expenses that restaurateurs have to cover, it also impacts customers’ willingness to buy meals at full price. Laura Rae Dicky, CEO of restaurant chain Dickey’s Barbeque Pit, told Fox News she’s noticed “recession-oriented behavior” from customers as sales dwindle. The number of customers using coupons at Dickey’s Barbeque Pit jumped over 20%. And Forbes notes that consumers spend less when gas prices are above $4 a gallon and dining out is one of the first cuts money-conscious consumers make.
Is there an end in sight? We can’t predict the future, but according to personal finance magazine Kiplinger, inflation rates are expected to decline over the course of the year. So I hope the restaurant industry finally takes a well-deserved break.