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Nearly 40% of restaurant owners couldn't pay rent in June, new survey finds

Jun 18, 2021, 21:23 IST
Business Insider
People dine inside a restaurant in New York City, one of America's dining hubs.Spencer Platt/Getty Images
  • A new survey has found that 39 percent of US restaurant owners were unable to pay rent in June.
  • These numbers are better than in May, but still paint a bleak picture for the recovering industry.
  • Many owners have blamed the labor shortage, which has left them short-staffed.
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Pandemic restrictions are easing, but restaurants are still suffering. 39 percent of restaurants were unable to pay June rent, according to a new survey from the Alignable Research Center.

Alignable is an online network for small businesses with 6.5 million members, and it releases monthly statistics based on surveys. The June numbers are an improvement for restaurants, with 49 percent unable to pay rent in May, but the industry still lags behind small businesses as a whole. 37 percent of all small businesses were unable to pay rent in June, for example.

Restaurants are struggling to find employees

Restaurants are still facing a massive labor shortage that's hurting their bottom lines. In April, the latest month for which data is available, restaurant workers quit at record levels.

The quit rate, which refers to the percentage of people who voluntarily leave their jobs over the period, reached 5.6 percent in April for the food service and accommodations sector. That number is an all-time high for the industry, according to Gordon Haskett Research Advisors, and it was more than twice the rate of the economy as a whole, not counting farming jobs.

The high quit rate is an "indication that restaurant sector employees are leaving their jobs to pursue higher wage rate opportunities - in both other sectors and other restaurant concepts," Gordon Haskett's analysts said in a report.

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Restaurants and stores are looking to staff up and return to normal as COVID-19 restrictions lift and the country slowly reopens. Hiring has been difficult for many companies, which have reported a lack of candidates for open positions. Many businesses are offering perks, bonuses, and benefits to new employees just to get them in for interviews, while some like Chipotle are raising wages in the hopes of finding workers.

But retailers and restaurants are also struggling to retain workers who want to leave for new opportunities. That's making the sector's labor crunch even worse.

Food workers are leaving the industry over low pay and harsh conditions

Some workers are taking these conditions as an opportunity to leave retail and restaurant jobs to get away from low pay and difficult customers, and a growing number of openings in the labor market is making it easier to transition to new careers. Some workers who were furloughed or laid off early in the pandemic may never return to fast food and customer service work.

Minority-owned businesses are being hurt disproportionately compared to white-owned shops.Hinterhaus Productions/ Getty Images

Alignable also found that minority-owned businesses were far more likely to have trouble paying rent than their white-owned counterparts. Though 37 percent of all small businesses couldn't pay rent, the divide across races is massive. 35 percent of businesses not owned by minorities were unable to pay rent, compared with 53 percent of minority-owned businesses.

Black-owned businesses closed at nearly twice the average rate during the pandemic, and minority-owned businesses have been less able to access credit than white business owners.

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Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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