Operators fared worse in April than they did in February. 

As the ebbs and flows of pandemic-related pressures persists, a number of operators remain concerned about their ability to remain open. 

According to the latest information from Alignable, which studies small businesses, 33 percent of restaurants were not able to pay their rent during April. That number represents a 5 percentage point increase from February. 

Restaurants aren’t the only businesses struggling to meet rent obligations. Industries like art/entertainment (59 percent), travel/lodging (41 percent) construction (33 percent), and retail (34 percent) all faced similar situations, or worse. 

In the same report, 46 percent said their rent was higher now than it was six months ago. Another 7 percent said their landlords are planning to raise rent soon. Small business owners in New Jersey, Illinois, Maryland, and California have faced more rent challenges than earlier in 2022, while Georgia, Texas, Massachusetts, New York and Florida have seen better conditions. 

With inflation placing substantial pressure on operators, federal assistance could play a major role.  

In April, the House passed a $55 billion bill aimed at providing assistance to restaurants and other struggling small businesses. The bill passed 223-203, meaning it now awaits confirmation from the Senate. A majority of the $55 billion would be earmarked to help replenish the Restaurant Revitalization Fund, which was part of the American Rescue Plan President Biden signed into law last year. Nearly 300,000 restaurants and bars applied for grants through the RRF, according to the Small Business Administration, but only a third of applicants received relief.

A survey conducted by the Independent Restaurant Coalition shows more than 80 percent of restaurants that didn’t receive grants have reported they are on the verge of permanent closure. The IRC stated upwards of 90,000 bars and restaurants have closed since the onset of the pandemic.

In response to expensive costs, brands such as Chipotle and McDonald’s have increased menu prices since the start of the year, testing the limits of customers’ wallets. The food away from home index in March rose 6.9 percent year-over-year, the largest 12-month increase since December 1981. Full-service meals rose 8 percent, while quick-service menu prices increased 7.2 percent. Higher costs related to labor, gas, and equipment are also at 40-year highs.

John Rivers, CEO of Florida-based 4 Rivers Smokehouse, thinks consumers will only take so much. He believes restaurants will need to be mindful of boundaries.

“If you manage your business from a reactionary perspective like we used to for years you’re going to get caught. Because the landslide is too steep at the moment,” he said.

According to Revenue Management Solutions, guests reporting at least one weekly drive-thru visit decreased in comparison to 2021 (from 86 percent in Q4 2021 to 80 percent in Q1 2022).

Almost 70 percent of respondents feel restaurant prices are “higher” or “much higher,” while 63 percent feel prices are “too high.”  Two out of five surveyed said they feel as if they’re getting less value from restaurants compared to earlier in the year.

Consumer Trends, Feature, Finance