Inflation in a Post-Lockdown Economy Created ‘Perfect Storm’ for Mass Restaurant Closures

Restaurant for rent by owner sign during pandemic, Manhattan, New York. (Joan Slatkin/Educ
Joan Slatkin/Education Images/Universal Images Group via Getty

Inflation, the high cost of living, and the post-coronavirus lockdown landscape have created the “perfect storm” for restaurants across the country to fail, analysis shows.

From sprawling metropolises like New York City to midwestern towns, Americans are eating out less and less as the value of their dollars plummets. 

Data from the third quarter of 2023 shows that visits to full-service restaurants across the United States were down nearly five percent from 2022, while customers at coffee shops shot up by around the same amount. 

As people returned to in-person work after the pandemic shutdowns, their fast-casual food and drink orders went up while they spent less to actually sit down somewhere and eat.

“Overall dining visits fell 2.4 percent [Year over Year], and full-service restaurants – with their relatively high price point compared to other dining segments – seemed to be particularly impacted by the wider economic outlook,” according to location analytics firm

Even New York City’s massive dining industry — it would take a person over 22 years to eat at every single restaurant — has been impacted by people simply having less money to spend on luxuries. 

Over 40 restaurants and bars in the city closed ​between the last week of December 2023 and the first week of January 2024, Eater New York reported.

“The oldest, a deli in Bayside, was open for 92 years. The newest, a hot dog shop on St. Marks Place, lasted two months,” according to the outlet.

Some business owners said that business just “never picked up” after the lockdowns, while others noticed that people “are staying indoors” more.

Middle America may be feeling the negative impacts even more, as there are fewer people and lower incomes overall.

In Iowa’s capital city of Des Moines, many restaurants have been forced to shut down due to low foot traffic. 

“Establishments are of course aware of this but so are the remaining restaurant regulars,” reports the Daily Mail

When local Des Moines station KCCI interviewed some lunch diners last Monday, the few customers suggested reasons for the situation.

“I think people got used to cooking at home too and just going out less,” said customer Monica Wilke-Brown. 

Abby Sheffer said that she and her friends had noticed that “there’s a lot less people.”

“We went to the barbecue place down the road, and we were the only ones in there. And it was like that for two and a half hours,” she explained.

Jessica Dunker, president and CEO of the Iowa Restaurant Association, says the post-shutdown landscape has been detrimental for the entire industry.

The cost of goods has increased by 30 percent, while restaurant owners are having to shell out higher wages to keep up with the cost of living though fewer customers are coming in. 

It’s creating what KCCI refers to as the “perfect storm” for closures. 

“And that spells a very difficult landscape for Iowa’s restaurants,” Dunker told the outlet. “And when the math doesn’t work, you close.”

“There is an increase not just in the state of Iowa but across the country in these small independent restaurants just not being able to see what 5 or 10 years can look like in a way that makes business sense,” she added.


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