“I don’t know why that is,” Ruiz said. “We keep our quality high. We keep our service high.”
Ruiz cited inflation, competition, and finding and keeping staff as challenges in the past year, but he’s not the only business owner experiencing setbacks.
In the Conroe and Montgomery area, businesses such as Voodoo Grille, and Tasting Point Liquors Wines and Food closed in 2023. Others such as Majkszak’s Meat Market changed their storefront operations, according to previous reporting.
Shannan Reid, executive director of the Montgomery Area Chamber of Commerce, said member businesses cited doing more with less support and profit; technology; and labor and employee culture as pain points in a December internal survey.
What's happening?
Patrick Jankowski, chief economist with the Greater Houston Partnership, said he’s noticed a national trend of restaurant and retail small businesses closing in the last six to 12 months. He said he believes the phenomenon is due to higher interest rates and a slowing economy.
“Small businesses are facing that difficulty right now: the general slowing of the economy,” Jankowski said.
Twenty-four percent of surveyed business owners nationwide cited “labor quality” as their biggest business problem as of November, per a Dec. 12 news release from the National Federation of Independent Business Texas. Twenty-two percent of owners cited inflation as the biggest challenge.
“We’ve got the rising cost of doing business, and we have a decreased profitability standpoint for what they can margin out at the end of a month, of a day, [etc.],” Reid said. “And [small businesses] are doing more activity with less people, less time and less money.”According to the U.S. Chamber of Commerce’s Small Business Index for the fourth quarter of 2023, which is compiled from 750 unique interviews with small businesses:
- 53% cited inflation as one of the biggest challenges they’re facing
- 22% cited revenue as a top concern
- 25% said the U.S. economy is in good health
- 53% agreed there is a worker shortage in their local area
“So much goes on in [the food business] and around it. From customer service to food to quality to staff to inventory, inflation. ... So I feel like the restaurant industry or the food business in general is one of the hardest to keep afloat," Ruiz said.
“Some businesses [that] were able to thrive during the boom times of the last two, three years are going to have to make adjustments, and those that can make the adjustments will survive. Those that can’t will go by the wayside," Jankowski said.
“Some food costs stabilized, but for the most part, food costs went through the roof, and employees and labor costs more than doubled. So it became less profitable and very difficult to manage the variables," Hodge Podge owner Jeff Angelo said.
Zooming in
Despite the challenges, Ruiz said Cowboy Tacos and Burgers plans to expand into a new trailer with a larger kitchen and offer new menu options.
“By having a big trailer, we will cut down on the wait times, hopefully by 50%,” Ruiz said. “And that’s another way we’re going to tackle the issues we’ve had this year. ... One of the biggest reasons we may lose business is because we do take a while to make the food, being that it’s fresh.”
In Montgomery, the Hodge Podge Lodge closed its restaurant at the end of 2023. Owner Jeff Angelo said food and labor costs were factors, and the business plans to focus on experiences by adding two more bed-and-breakfast rooms and special experiences like chef’s tables.
“[The business is] going to actually become more profitable,” Angelo said. “We’ll do less revenue, but we’ll become more profitable because we’re only purchasing talent, which is labor talent, as well as food just for the events that we’re producing for. So we won’t have a lot of waste.”
A noncomprehensive Community Impact analysis of local businesses showed the following businesses closed in 2023.
- 219 Social House
- MoCo Food Hall
- Tasting Point Liquors Wines and Food
- Voodoo Grille
- Wister's Bar and Grill
- Almost August
- Hodge Podge Lodge
- Majkszak’s Meat Market
- The Shout House
Jankowski said although the economy is expected to be slower in 2024, this is relative since 2021 and 2022 were strong years for economic growth after stagnation during the onset of the pandemic in early 2020.
Meanwhile, after fighting for two years to ease inflation by increasing federal interest rates, the Federal Reserve’s board of governors decided not to raise them in mid-December, according to a Dec. 13 news release from the board. However, it’s unknown whether interest rates will decline in 2024.
Lower interest rates would be especially beneficial to small businesses, which have slimmer operating margins, Jankowski said in a Dec. 18 email.
“If the Federal Reserve does lower interest rates in 2024, that should provide some relief to local businesses and help them to stay viable,” Jankowski said in the email.
