Spring restaurateurs Nelia Fhehaj—owner of Luliet Creamery and Bake Shop—and Mary Ann Mascorro—owner of Jackpot Pizza—have never met in person, yet Fhehaj runs a promotion to support Jackpot Pizza.

Fhehaj said she decided to help Mascorro after seeing a post on social media about how her business was struggling. On Nov. 4, Fhehaj—whose business has also dealt with inflation challenges—began offering customers a free scoop of ice cream if they spent at least $10 at Jackpot Pizza.

“It’s been a difficult six months ... it’s heartbreaking to see a lot of small mom and pop shops going out of business. ...This is the time where we need to rally together,” Fhehaj said.

Inflation has been brutal for small businesses, said Mascorro, who has owned Jackpot Pizza since 2015 and has supported other small businesses in the past. She’s seen the price of some ingredients, such as meat and cheese, skyrocket.

“The cost of food is going up, and we can’t keep passing that on to the customers every time we have an increase,” Mascorro said.

Many retailers—locally and nationally—have shuttered their doors due to obstacles. At least 19 businesses across Spring and Klein closed in 2023, according to prior reporting from Community Impact.
What's happening?

Patrick Jankowski, chief economist with the Greater Houston Partnership, said he has noticed a national trend of small businesses closing in the restaurant and retail sectors during the last six to 12 months. He said he believes the phenomenon hasn’t been reflected in data yet, since it lags behind, but it can be attributed to higher interest rates and a slowing economy.

“When [the economy is] going gangbusters, it’s a lot easier for small businesses to make a profit and to expand,” Jankowski said. “Small businesses are facing that difficulty right now: the general slowing of the economy.”

A tight labor market has also proven challenging for small businesses, since they cannot compete with pay that larger companies offer, Jankowski said.

Twenty-four percent of surveyed business owners nationwide reported “labor quality” as their biggest business problem as of November, according to a Dec. 12 news release from the National Federation of Independent Business Texas. Twenty-two percent of business owners cited inflation as the biggest challenge.

Individual businesses in Spring may be closing for a variety of reasons, said Bobby Lieb, president and CEO of the Houston Northwest Chamber of Commerce.

Location closures made by large national chains—such as Bed Bath & Beyond and Tuesday Morning, which each closed 10 locations in the Greater Houston area in May—may skew data on the topic since they likely lost customers to online shopping, Lieb said.

However, Lieb said he believes small locally owned business closures—in the Spring and Klein area and across the country—may be a “direct function of the inflation.”

“[Inflation] is just lingering, and it’s lingering longer than anybody had hoped,” Lieb said.

In their own words
  • “Labor costs have gone up; insurance has gone up; cost of goods sold have gone up. Everything across the board has increased. The problem is that revenue ... is not following with it.” —Bobby Lieb, president and CEO, Houston Northwest Chamber of Commerce
  • “I think if we can just pass through this, we’ll be stronger on the other side.” —Nelia Fhehaj, owner, Luliet Creamery and Bake Shop
  • “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.” —Patrick Jankowski, chief economist, Greater Houston Partnership
  • “The beautiful thing about our community ... [is] everyone wants to see everyone succeed. It doesn’t matter if it’s another pizza joint down the street from me. ... Everyone wants to help each other.” —Mary Ann Mascorro, owner, Jackpot Pizza
The details

According to the U.S. Bureau of Labor Statistics, the Greater Houston area’s consumer price index—the average change of goods’ prices overtime—rose 4.7% year over year for October for food and beverages. Consumer prices saw a 10.1% increase year over year as of October—the highest increase in all listed categories—for fruits and vegetables.
Going forward

Although the economy is expected to be slower in 2024, Jankowski said, 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.