Why are so many restaurants closing in Washington DC?
Restaurants are closing at a rate of one a week in the District of Columbia as trouble hits independently operated eateries on multiple fronts in 2023.
Over 50 restaurants have shuttered their doors in the District of Columbia this year as they confront difficulties on multiple fronts. According to a recent survey by the Restaurant Association of Metropolitan Washington (RAMW) these include higher costs and lower foot traffic along with a spike in crime.
The problems reported by DC-area restaurant operators are being felt most acutely among the locally-owned mom-and-pop restaurants. “We’re in trouble,” said president and CEO of RAMW Shawn Townsend. “Our neighborhood restaurants are caught between a rock and a hard place.”
Why are so many restaurants closing in Washington DC?
The RAMW survey was conducted in early autumn and gathered responses from almost 290 restaurants, primarily located inside the District of Columbia. It found that over 40 percent of respondents said that foot traffic was down this past summer, averaging nearly 30 percent lower.
This translated into an over 30 percent decrease in sales from the summer of 2022 for the more than a third that reported a drop in sales.
On top of that, costs have been rising with food and rent increases as well as labor. Driving the rise in what establishments are paying workers is Initiative 82, passed overwhelmingly by voters last fall, which phases in over a five-year period the way employers pay tipped workers.
By 1 July 2027, restaurants will have to pay tipped employees the same minimum wage as non-tipped workers, $17 per hour. Payroll costs have already jumped on average by a quarter according to the survey.
DC restaurants raising menu prices, adding service charges
The added cost of doing business has led almost all eateries to pass the increase onto customers by raising menu prices. On average restaurants have applied a 16 percent increase but it’s still not enough to preserve margins as “everything is above that,” says RAMW vice president of government affairs Che Ruddell-Tabisola.
Another way restaurateurs are trying to protect their bottom line is by applying service charges which can range from 3 percent to 18 percent. The disparity from one restaurant to another has been confusing for customers and is drawing complaints.
Meals at DC restaurants also get hit with a 10 percent sales tax making dining out within the District more expensive than in the suburbs. Nearly a third of customers are heading across the border to Virginia and Maryland with more regularity to dine out.
“Costs have soared, but diners understandably can only pay so much for a meal,” said Townsend.
Crime deterring customers from dining out
Mixed into the cocktail of woes for restaurant proprietors is an uptick in gun violence in the District of Columbia this year. Ruddell-Tabisola says that many customers are afraid to dine out due to increased violent crime in some of the most active nighttime areas.