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Why are so many restaurants not able to pay rent?

According to new data, 52% of restaurants can't pay their rent


New data from Alignable finds that 52% of independent restaurant owners couldn’t afford to pay December rent, up 10% from November’s numbers and marking the highest level in 2022. Small restaurant owners are struggling more than the average small business, with overall rent delinquencies for December at 40%.

This is a stark trend versus last December, when just 26% of small businesses couldn’t pay rent. It’s also an increase from previous months; in October, 49% of restaurant owners couldn’t pay rent, while in September, the number was 36% and in August and July, the numbers were 46% and 45%, respectively.

Typically, the fourth quarter tends to yield the opposite trend for small restaurants as more people are out and about shopping and celebrating, but a confluence of pressures – including higher rent and declining revenues – have taken a toll this year. Fifty-two percent of small business owners say their rent is higher than it was six months ago. Additionally, 64% of small businesses said consumer spending was lower than it was in November.

Optimism has taken a hit as well, with nearly 80% of small business owners worried about rising interest rates. The U.S. Federal Reserve recently raised interest rates another half point to help combat relentless inflation and those rates are now at their highest level in 15 years. More increases are expected this year, according to the Wall Street Journal, impacting small business owners’ ability to borrow, invest or grow.

Learn more from executive editor Alicia Kelso.

TAGS: Finance
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