Why Restaurants Struggle in 2024

Audio version available here (1 min. 45 sec.)

As the 2024 economy grows tougher on entrepreneurs, there’s one group of business owners that have felt the full weight of the pressure: restaurant owners. Not only is the restaurant industry notoriously difficult to excel in, the circumstances and costs in recent months have made it extraordinarily challenging.

On top of regular hurdles restaurateurs face on a daily basis, like high startup and supply costs, 2024 has been relentless. Inflation has been untamable by the Fed despite record interest rates, saddling the burden on restaurant owners who take out loans to fund their business venture and regularly buy supplies and ingredients. Since costs kept going up, many restaurants had to risk implementing menu price hikes to keep up.

For several months, many consumers were still willing to pay these higher menu prices, but that is now rapidly changing. With the US’s job market coming up with disappointing numbers in July, it’s very likely that consumer spending will cool off. One of the first luxuries a consumer pressed for cash may sacrifice is going out to eat. This can culminate in more pressure for a restaurant owner stuck between lowering prices to draw diners back in, or raising prices to make up for lost revenue.

Even in foodie towns like Houston, many universally respected restaurants have had to close their doors permanently. Prego, a beloved “Italian mainstay” for 40 years, shut down entirely at the end of May with no plans to reopen any time soon. Not only has the cost of running a restaurant been difficult lately, recent natural disasters such as Hurricane Beryl spelt doom for restaurants. Several days of lost power meant thousands of dollars of inventory wasted and hundreds of potential customers not served.

With there being many challenges in running a business in the current economic state of the US, restaurateurs may wonder how they can thrive. The first step is to know your numbers and have a proper plan for any turn the economy may take. Not sure how to achieve this? Contact the financial experts at XQ CPA. We’re here to help business owners like you.

Phone: 832-295-3353

Online Booking: https://xqcpa-bookme.acuityscheduling.com/schedule.php

Want the latest and greatest tax tips and business news? Stay up to date with our social media!

Our blog: https://www.xqcpahouston.com/blog

Our channel: https://youtube.com/@XQCPA

Facebook: https://www.facebook.com/XQCPA/

Instagram: https://www.instagram.com/tax_xqcpa/

Twitter: https://twitter.com/xqcpa

LinkedIn: https://www.linkedin.com/company/xq-cpa/

TikTok: https://www.tiktok.com/@xq.cpa

Sources:

https://www.houstonchronicle.com/food-culture/restaurants-bars/article/houston-restaurants-closed-recently-19592518.php