Real estate data shows the cost of restaurant space is rising.
CHANGING AUSTIN Restaurant Scene 51% of every dollar spent on food in Texas goes to restaurants.
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In Austin, at least 30 restaurants have closed in 2022, with many owners citing rising costs and labor shortages. Meanwhile, many Austin diners are reporting higher costs and changes in service at restaurants, including more restaurants utilizing QR codes for ordering or busing their own table.
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The average cost of rent for a restaurant space in Austin increased by 37.9% in the past 10 years.
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SOURCE: COSTAR REALTY COMMUNITY IMPACT NEWSPAPER
Pressure on local restaurants Of the more than 30 Austin restau- rants that Community Impact Newspa- per reported closing this year, many owners cited food costs, labor short- ages or burnout. Those restaurants included the Bill Miller Bar-BQ and Lucy’s Fried Chicken location on Bur- net Road, Sweet Ritual, The Way Far South Philly Deli and Sala + Betty. Kristin Collins, owner of the bakery Flu and Meringues in North Central Austin that closed in July, said that the decision to close “made itself for [her],” pointing to in ation in food, rent, fuel, permit prices and packaging. Collins said that at the time she closed, revenue was actually increas- ing, but she could not outpace in a- tion. The price change of eggs alone cost her businesses an extra $800 a month, she said. “There were people who really loved it and depended on it, and in a weird way, I feel like I’m letting them down,” she said. Hajimaleki, owner of several Aus- tin spots, including Keepers Coastal Kitchen, District Kitchen + Cocktails, Oasthouse Kitchen + Bar, and Short- ie’s Pizza and Grinders, said he is
constantly evaluating his business practices to keep his restaurants going. Hajimaleki said that while his food supply cost was raised around 15%, he only raised the prices on the menu 8% to retain customers. Hajimaleki also opted for QR code menus and order- ing via phone instead of with a server for his seafood restaurant Keepers in Southwest Austin. “The dining experience happens at the table over great food. So whether you’re ordering from a server or order- ing on a QR code, to me personally, doesn’t change that,” Hajimaleki said. Hajimaleki said he continues to pri- oritize the quality of the ingredients on his menus and sta compensation. Despite his challenges, Hajimaleki said owning several restaurants in the area has helped keep business a oat, as his consistently pro table locations balance out the newer concepts. Lisa Jackson, owner of Pie Bar in South Austin, said she has to be cre- ative to keep her small business alive. Jackson said the price of most ingre- dients rose since June 2021. The eggs and heavy cream she uses have seen 221% and 47% increases, respectively. Despite these upsurges, Pie Bar has
not raised its in-store prices. Instead, Pie Bar has relied on strategic nancial moves to save where it can to maxi- mize its pro t margin, such as cutting back on sta and selling bottled water during the hot summer months. “We kept them at $1 for a bottle of water, and we sold the heck out of it,” she said. Jackson said that a huge part of her decision to not raise prices is to main- tain the community she’s cultivated at Pie Bar, citing the man who comes in for a cup of co ee before his physical therapy appointment, and the parents who treat their kids to a slice of pie when they receive a good report card. “I feel like it’s really important to be part of the community that you’re in business with,” she said. Fried said his restaurant did not start turning a pro t until three months ago—almost ve years into its operation—but chose to maintain its prices and traditional customer service model to ensure the best hos- pitality experience. To Fried, hospitality is one of the main purposes of restaurant owner- ship. When he had a panic attack for the irst time in his life eight years
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customer service model. Texas Restaurant Association data shows 86% of restaurants in the state raised their prices since 2019. The food index, which measures the change in price of a standard basket of food—including items such as eggs, milk, produce and meat—rose 11.1% since last year as of July, according to the U.S. Bureau of Labor Statistics. “When you throw in labor and food and real estate taxes, it’s like a perfect storm,” said Amir Hajimaleki, owner of Silkhouse Hospitality group. “They all hit at the same time. I think that’s why a lot of places have gone out of business.” More than 90% of restaurants in the state raised their prices since 2019, according to the TRA. “[Restaurants] have gone through trial by re over the last two and a half years. And so what we encourage them to do is exactly what we’re see- ing in the market which is adapt [and] know that this in ationary cycle will not last forever,” said Kelsey Erickson Streufert, chief public a airs o cer for the TRA.
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