From the cover
‘Today’s revenue is tomorrow’s expense’
521
45
The overview
Closings
MCHARD RD.
MCHARD RD.
Amid challenges with inflation, as well as increased rent and labor costs, business and restaurant owners across Pearland and Friendswood say they are struggling. The restaurant industry runs on tight margins, said Mike Shine, the executive director of the Houston chapter of the Texas Restaurant Association. Those margins have gotten tighter in recent years, with the inflection point in a lot of cases being the COVID-19 pandemic. Many restaurants several years ago spent about 30% of their revenue on food. Today, that has upticked to around 33%, Shine said. Other factors playing into that include a tougher labor market, real estate values going up—which in turn drive up rent costs—and people eating out less than they have in previous years, Shine said. Specifically, Shine said Texans ate out an average of more than four times per week pre-pandemic. Today it’s around three. “You live day-to-day,” Shine said. “Today’s revenue is tomorrow’s expense.” Despite this, local chamber officials in Pearland and Friendswood said they are not seeing any signs of a dip in the market. Membership
Pearland
8
W . BROADWAY S T.
2 7
9
5
518
12
Friendswood
GNOLIA PKWY.
11
6
90
3
4
288
BAILEY AVE.
1
Manvel
48
MCKEEVER RD.
10
35
89
2351
MASTERS ST.
N
6 1 Friendswood Grocery 2 Fire Stone Pizza Bar 3 Pignoli Bakery 4 Dunn Brothers Coffee 5 German Store
6 2+ businesses in Pearland Town Center 7 4 Amigos Mexican Restaurant, Bar & Catering 8 Hubcap Grill
9 InStyle Boutique 10 Jado’z Grill House 11 Southern Hype Soles 12 Emma’s Mex Grill
THIS MAP IS NOT COMPREHENSIVE OF CLOSURES, NOR DOES IT INCLUDE ALL OF THE BUSINESSES THAT HAVE OPENED IN THE PAST YEAR
However, over the past year, both the Pearland and Friendswood areas have in total logged at least a dozen closings—the bulk of which are restaurants.
renewals are strong and multiple local services remain available to help small businesses, said Jim Johnson, president of the Pearland Chamber of Commerce.
The challenges
Zhou said he’s seen food prices increase month over month, which made it challenging to keep menu prices stable. Around the same time prices increased, he said he started to notice fewer people were eating out, leading the restaurant to offer more promotions such as daily happy hours and lunch specials. More than 90% of U.S. restaurants surveyed said labor costs, food costs, inflation and the economy were “significant challenges” in 2024, according to the National Restaurant Association’s State of the Restaurant Industry 2025 report. Other data from the association, such as its performance index, suggests the industry is con- tracting and has steadily declined in performance since 2022. After a brief uptick in late 2024 and early 2025, the industry’s overall performance is waning again. Despite this, while food costs have continued to go up in the Greater Houston area, according to data from the Bureau of Labor Statistics, the rate of increase has slowed down since 2023. From August 2021 to August 2025, the consumer
Food costs
Retail rent Rent per month (by square foot)
CPI on food in Houston area
0 250 225 275 300 325 350
$10 $5 $15 $20 $25
$20.43 $20.87 $20.49
+26.8%
$18.95 $19.58
+6.6%
$0
Q3 2021
Q3 2022
Q3 2023
Q3 2024
Q3 2025
SOURCE: BUREAU OF LABOR STATISTICS/COMMUNITY IMPACT
SOURCE: PARTNERS REAL ESTATE/COMMUNITY IMPACT
have faced is increased taxes as the area around the restaurant continues to develop. Zhou said his taxes doubled three years ago, an increase he attributes to nearby commercial development and rising appraisals.
price index, or CPI, for food costs increased at a faster rate than from August 2015 to August 2020. CPI is calculated by comparing current average prices with a baseline. Another economic pressure Masa Sushi officials
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