The past few years have been downright brutal for restaurants.
You’d think that following the pandemic, consumers would’ve rushed to get back to in-person dining. And they did, for a while, especially once they had stimulus checks to spend.
Related: Forget Starbucks, another coffee giant promises higher prices
But all of those generous pandemic-era stimulus policies caused a huge surge in inflation, driving living costs up drastically. And for the past few years, it’s been a struggle for consumers to keep up.
In the wake of higher living costs, consumers have had to be more careful in spending their money. That’s driven many diners away from restaurants, taking crucial revenue away.
💵💰Don’t miss the move: Subscribe to TheStreet’s free daily newsletter💰💵
At the same time, inflation has also been driving costs up for restaurants. That, coupled with declining business, has led to a wave of bankruptcies and closures.
In May of 2024, Red Lobster filed for bankruptcy, citing financial challenges and changing consumer behavior.
About six months later, TGI Fridays filed for Chapter 11. Like Red Lobster, the popular chain fell victim to declining sales.
A San Francisco favorite is closing its doors for good
The current economic climate has been tough for restaurants. And as much as it’s been impacting larger chains, local restaurants have been struggling, too.
After a very successful 23 years in business, Chava’s Restaurant, a beloved restaurant in San Francisco’s Mission District, is gearing up to permanently close its doors on July 15.
Related: Impossible-to-book global sensation restaurant comes to US
Owner Elba Hernandez made the difficult decision not to renew her lease due to the current economic situation.
“A lot of my customers have had to leave San Francisco,” she told Mission Local, explaining that her business never quite recovered from the events of the pandemic.
Chava’s Restaurant is known for its enchiladas, chilaquiles, and birria dishes.
Hernandez is now in the process of trying to sell off kitchen supplies and decorations as she winds down the business.
She says she’s open to pioneering a new version of Chava’s down the line but needs a break for now.
Restaurant closure is part of a troubling trend
The closing of Chava’s is a huge loss for San Francisco’s Mission Street and for locals who enjoyed the restaurant’s authentic menu. But while customers may be saddened to see a popular restaurant say goodbye, the concern goes beyond the loss of a single dining establishment.
The trouble is twofold.
First, both local restaurants and national chains have been struggling since the events of 2020Â to stay afloat and retain customers.
Related: Historic Chinese restaurant closing unexpectedly after 42 years
On top of that, tariffs may force restaurants — especially local ones — to raise prices to keep up with their costs. But that could, in turn, lead to an even larger pullback in consumer spending.
The closing of Chava’s is also concerning given its location.
For years, San Francisco has been bleeding businesses, from restaurants to retailers. Small businesses and well-known chains alike have been abandoning the once-thriving city, citing reasons that include an uptick in crime and decreased foot traffic.
Although many major cities are pretty much back to normal following the pandemic, San Francisco is the glaring exception. The city isn’t seeing the same level of commuters it did prior to early 2020.
More Fast Food & Restaurant News:
- Starbucks makes shocking pricing move customers will love
- Bankrupt restaurant chain offers new deal, stiff drink
- New Taco Bell menu items combines multiple classics
With fewer people coming into the city, local businesses are hurting. And unfortunately, Chava’s may be only one of many San Francisco restaurants to close its doors before the year comes to an end.