Nearly 40 Percent of Restaurants Couldn't Cover June Rent

Many blame issues with staffing shortages.

June 18, 2021 Ben Coley

Almost 40 percent of restaurant owners couldn't cover June rent, according to a new report, a stark reminder that the industry has not yet shaken off all the damage from the pandemic.

Small business network Alignable polled 3,814 randomly selected small business owners from May 22 to June 15 to gather data. Restaurateurs—who are dealing with an incredibly pressing labor issue— told the company that they can’t reach their revenue goals without the proper staff to handle the pent-up demand. And the consequences are dire. In a separate poll conducted among 3,772 small business owners from May 22 to June 1, Alignable found that 39 percent of restaurant operators express concerns about staying afloat until the end of summer.

The number of job openings across the U.S. reached a record-high 9.3 million on the final business day of April, according to the Bureau of Labor Statistics. The data is part of the agency’s monthly Job Openings and Labor Turnover Survey. April was the highest amount since the series began in December 2000. The previous record occurred in March, when there were 8.1 million openings. Many have blamed the shortage on the weekly $300 boost from the federal government that’s part of President Joe Biden’s $1.9 trillion American Rescue Plan. The enhancement is scheduled to expire September 6, but many states have taken matters into their own hands and decided to end the measure early. Half of states are ending the program—some have already done it and others will do so as late as mid-July.

Restaurants support the proactive move wholeheartedly. Alignable found that 71 percent of restaurant owners are happy about the benefits ending. That’s most among all job categories, followed by construction (70 percent), real estate (69 percent), health and wellness (66 percent), and retail (57 percent).

Although the situation facing restaurants remains serious, the sector did improve from last month, when 49 percent of operators couldn’t cover May rent. Also, the industry is having an easier time compared to other segments. Seven other industries are having a harder time paying rent, Alignable’s data shows, including entertainers/artists (47 percent), travel/lodging (44 percent), and transportation (43 percent).

Alignable

Overall, 37 percent of respondents couldn't cover June rent. Even more alarming, 53 percent of minority business owners couldn’t afford rent in June, which is eight percentage points higher than May. In comparison, 35 percent of nonminority owners couldn’t afford rent in June.

“This data is particularly disturbing as minority business owners throughout the COVID Era have struggled more than their peers and reported receiving less support than the general population in terms of PPP loans,” said Chuck Casto, Alignable’s head of corporate and marketing, in a blog post.

It’s a significant reason why the $28.6 billion Restaurant Revitalization Fund prioritized restaurants owned by women, veterans, and socially and economically disadvantaged individuals. The initial two weeks saw applications from more than 122,000 women business owners, more than 14,000 veteran business owners, and more than 71,000 economically and socially disadvantaged individuals. In that period, 57 percent of submitted applications came from those select groups.

The states with the highest percentage of small business owners that couldn't pay June rent were New York (47 percent, up 7 percent from May), Virginia (47 percent, up 1 percent from May), and Georgia (43 percent, down 3 percent from May). The best-performing states were Colorado (20 percent, down 15 percent from May), Ohio (26 percent, down 13 percent from May), and Michigan (30 percent, down 17 percent from May).

“Beyond coping with ongoing effects of the COVID Era, several of the industries above are hurting due to inflationary pressures, including gas prices, skyrocketing lumber costs, ongoing restrictions around people who have not been vaccinated yet, and more,” Casto said.