Restaurateurs’ Rent Woes Improved in November

As the holiday season approaches, restaurateurs can expect more traffic and sales to help pay the rent in December.

  • Forty-two percent of small-business restaurant owners couldn’t pay their rent in full or on time in November, a 7% drop from the previous month.
  • With the holiday season upon us, relief should be on the way for struggling restaurateurs.

After an alarming rise in rent delinquency in October, small-business restaurant operators rebounded a bit in November, according to new figures released by Alignable last week.

For small businesses overall, the so-called “rent crisis”—to use Alignable’s words—broke a record for 2022 last month. Forty-one percent of all U.S.-based small business owners reported that they could not pay their rent in full or on time in November.

For restaurants, the rent delinquency rate improved by seven points, dropping from 49% in October 2022 to 42% in November 2022.

“Yes, it’s still high,” the Alignable report states, “but it’s a nice jump in the right direction.”

Related: 5 ways to pump up holiday sales at your pizzeria

Even so, the numbers indicate that restaurant owners are “still having major rent troubles,” the report notes.

Declining foot traffic due to inflation is likely a major culprit in restaurateurs’ rent woes, according to RJ Hottovy, head of analytical research for Placer.ai, which uses location data from mobile devices to estimate restaurant visits. “We’re seeing a noticeable impact on visitation trends because of inflation,” Hottovy recently told CNN.com.

Hottovy said growing sales for chain restaurants in 2022’s third quarter are a bit deceptive. “You’re seeing that dichotomy where you see solid sales numbers, but at the end of the day, it’s mostly…because of price increases,” he told CNN.

But restaurant visits and orders should bounce back in December. The holiday season is typically a boom period. Holiday shopping will bring customers out into the stores, and when they get hungry, pizza is one of their most desirable—and affordable—options. Gift cards for restaurants also generate additional sales, and catering opportunities will multiply for pizzeria operators. Even people who do a lot of their shopping online will still crave pizza for delivery.

Joseph Alvarez, senior vice president of sales, catering and community relations for the Boston Market chain, sounded a positive note in a recent interview with Nation’s Restaurant News (NRN). He said November and December are “extremely profitable months” for Boston Market. “A major portion of our sales is achieved during these two months alone,” Alvarez told NRN.

Hudson Riehle, senior vice president of the National Restaurant Association’s Research and Knowledge Group, suggested struggling restaurateurs are in for some needed relief in December.

“If you look at it in a multifaceted way, the pent-up demand for socialization and travel is there, and the [restaurant] operator community is much more innovative in tapping into different consumer patterns, such as meeting off-premises demand [and] stepping up their catering and gift card marketing,” Riehle told NRN. “It’s quite clear consumer attitudes toward restaurants remain positive.”