Seeking a more affordable market to do business, Zhou eyed Clear Lake and opened Masa Sushi in 2005.
Two decades later, Zhou said he is facing similar challenges he saw with his first restaurant—rent prices rising, food costs increasing and fewer people eating out.
It’s a similar story many in the industry—including in the Pearland and Friendswood area—are seeing. While roughly a dozen businesses in the area have closed dating back to 2024, others remain open but are struggling to make ends meet.
The overview
Amid challenges with inflation, as well as increased rent and labor costs, business and restaurant owners across Pearland and Friendswood say they are struggling.
The restaurant industry runs on tight margins, said Mike Shine, the executive director of the Houston chapter of the Texas Restaurant Association.
Those margins have gotten tighter in recent years, with the inflection point in a lot of cases being the COVID-19 pandemic. Many restaurants several years ago spent about 30% of their revenue on food. Today, that has upticked to around 33%, Shine said.
Other factors playing into that include a tougher labor market, real estate values going up—which in turn drive up rent costs—and people eating out less than they have in previous years, Shine said. Specifically, Shine said Texans ate out an average of more than four times per week pre-pandemic. Today it’s around three.
“You live day-to-day,” Shine said. “Today’s revenue is tomorrow’s expense.”
Despite this, local chamber officials in Pearland and Friendswood said they are not seeing any signs of a dip in the market. Membership renewals are strong and multiple local services remain available to help small businesses, said Jim Johnson, president of the Pearland Chamber of Commerce.
However, over the past year, both the Pearland and Friendswood areas have in total logged at least a dozen closings—the bulk of which are restaurants.
The challenges
Zhou said he’s seen food prices increase month over month, which made it challenging to keep menu prices stable. Around the same time prices increased, he said he started to notice fewer people were eating out, leading the restaurant to offer more promotions such as daily happy hours and lunch specials.
More than 90% of U.S. restaurants surveyed said labor costs, food costs, inflation and the economy were “significant challenges” in 2024, according to the National Restaurant Association’s State of the Restaurant Industry 2025 report.
Other data from the association, such as its performance index, suggests the industry is contracting and has steadily declined in performance since 2022. After a brief uptick in late 2024 and early 2025, the industry’s overall performance is waning again.
Despite this, while food costs have continued to go up in the Greater Houston area, according to data from the Bureau of Labor Statistics, the rate of increase has slowed down since 2023.
From August 2021 to August 2025, the consumer price index, or CPI, for food costs increased at a faster rate than from August 2015 to August 2020. CPI is calculated by comparing current average prices with a baseline.
Another economic pressure Masa Sushi officials have faced is increased taxes as the area around the restaurant continues to develop. Zhou said his taxes doubled three years ago, an increase he attributes to nearby commercial development and rising appraisals.
- "At the end of the day, it depends on the quality of the food. Maybe our prices had to go up a little bit, but we really try to keep them down as much as we could," Masa Sushi General Manager Luis Perla said.
- "Rising cost in food and labor are continuing to be the key indicator," Shine said "If both of those exceed [a certain level] as a relationship to sales, you have a problem."
- "Business is tough. It's a tough world, especially right now," PEDC Marketing Director Melissa Cook said. "[We offer] a one-stop shop called Pearland Innovation Hub ... to be a resource for small businesses and entrepreneurs."
To help small businesses in town, the Pearland Economic Development Corporation has a number of programs and resources, Cook said.
The main one is the Pearland Innovation Hub, which, in addition to events and networking, offers grants and technical assistance. Other resources, such as creating documents related to human resources and learning materials, are available as well.
Advisors within the program can also direct business owners to other resources across the Greater Houston area, Cook said.
“We have a lot to offer by all means, but we’re not everything,” Cook said. “We can’t be everything, but we can help you know what’s available.”
Johnson and Carol Ives Marcantel, president of the Friendswood Chamber of Commerce, said events and networking opportunities are available through each chamber.
However, Shine said it’s common for restaurants not to be members of chambers. Luncheons and events often happen during the day—oftentimes when service is peaking.
Looking ahead
While struggles will continue to be ongoing for some, a few businesses are looking for creative ways to keep expenses down.
Tyler Neubauer, general manager at the barbecue restaurant Big Horn in Manvel, said he’s observed fluctuations in pricing. Still, because the restaurant works with multiple vendors, they’ve been able to maintain margins and avoid significant price increases.
For Shine, he said it’s important for patrons to continue to eat out.
“Neighborhood restaurants ... are the backbone of our society and communities,” he said. “I encourage people to find them, seek them out, give them business and know them. That will encourage them to succeed.”
