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Financing

Restaurant rent delinquencies soar in August

A survey of about 5,300 small businesses reveals that the delta strain of coronavirus has landlords waiting and operators worried.
Photograph: Shutterstock

More than 2 out of 5 restaurants (45%) were unable to pay their August rents, a five-point jump from the prior month and another indication the industry is backsliding as the delta strain of coronavirus continues to spread, according to a new survey.

The canvass of 5,349 small businesses by the referral network Alignable also found that the restaurant business is more worried than any other sector about the effects of the surge in COVID-19 infections. Nearly 9 out of 10 restaurants (88%) participating in the survey said they fear the more contagious coronavirus strain will slow economic recovery.

That compares with a 76% proportion of worriers across all types of small businesses.

The Alignable survey underscores restaurants’ distinction as a leading economic indicator. Despite the industry’s surge in delinquencies, the percentage of all small businesses unable to pay their rents fell for the first time in six months, to 30%, the small-business network found. About 35% were unable to pay landlords their July rent.

Alignable tied the worsening restaurant numbers to the spread of the delta variant, noting that consumers share operators’ fears about the surge.

The National Restaurant Association reported earlier this week that 19% of consumers have stopped going to restaurants in the current environment. A survey by the group also found that 9% of restaurant patrons had canceled a planned visit to a restaurant. Overall, 6 out of 10 consumers participating in the survey said they had changed their dining-out habits because of the recent surge in COVID infections.

The latest sales report from Black Box Intelligence shows that industrywide same-store sales hit a nine-week low during the seven-day stretch ended Aug. 15.

The restaurant association cited its evidence of a slowdown for the industry in a letter urging Congress to re-up the Restaurant Revitalization Fund, a grant pool that proved a lifeline for about 100,000 establishments.

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