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A third of restaurants couldn't pay their April rents, study finds

The figure marks a sharp increase from March, signaling that the industry's recovery has a ways to go.
Photograph: Shutterstock

About a third of the nation’s restaurants were unable to pay their April rents, an increase of 5 percentage points from the prior month, according to new research.

The findings come at a critical time for the industry. U.S. senators will be pressured in coming days to consider several pieces of legislation aimed at providing more direct aid to restaurants. Part of the resistance has been a sense the industry has fully rebounded from the nightmarish conditions of the pandemic and hence does not need more financial help.

Industry lobbyists have maintained that many operators carry a mountain of debt that could still sink their businesses. A big part of the burden, they say, are deferred rent payments that are now coming due.

The survey results released Thursday by Alignable Research Center support that contention.

The Center noted that new pressures are eroding the ability of restaurants and small businesses to keep their landlords happy. In addition to depressed customer traffic, many enterprises are being squeezed by inflation, including spikes in their monthly occupancy charges.

Still, the rise in restaurants’ defaults came as the financial situations of other small business types improved markedly, according to the Research Center, a part of the Alignable online network for small businesses. For instance, about 85% of automobile repair shops and other small businesses supporting the car industry were able to meet their April rent obligations, a jump of 13 percentage points from March, Alignable found.

For the first time since the pandemic started, the rent delinquency rates for minority-owned businesses dropped below 40%, Alignable reported. Those operations had been among the hardest hit by the pandemic, according to the researcher.

It found that 27% of small businesses owned by non-minorities were unable to cover their April rents, compared to a delinquency rate of 36% for minority enterprises.

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