After opening Miya’s Munchies’ storefront in Magnolia last April, co-owner Sumiyyah Harvey said the business scaled back to pickup-only in September, citing inflation and labor costs.

“The cost of goods in general have skyrocketed,” Harvey said.

Miya’s Munchies isn’t the only business feeling economic pressure. In Tomball and Magnolia, businesses such as Tropical Sno of Tomball closed in 2023. Others like Woodall’s Bar-B-Que scaled back.

SuperBurgers of Magnolia owners Adan and Dreama Munoz said inflation has made business difficult.

“Rising inflation has caused prices to be increased for our consumers, who have needs that need to be met,” Adan Munoz said.

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.

“[Labor quality and costs], the worry of inflation [and] recession and...interest rates,” said Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce. “That’s what really sets the tone for how a business might plan its upcoming months and whatnot.”

Although Miya’s Munchies co-owners Sumiyyah and Khaliq Harvey had built a client base four years prior to opening the brick-and-mortar with farmers markets in the area, Sumiyyah Harvey said their expectations for the business’s success were not met. Along with the challenges of rising interest rates, she said small businesses struggle to hire employees due to the competitive wages large corporations offer their employees.

The U.S. Chamber of Commerce’s Small Business Index is released quarterly and is compiled from 750 unique interviews with small businesses owners and operators. The following percentages show responses from the fourth quarter of 2023.
  • 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

In their own words

"The high interest rates have also made it very challenging to seek outside business financial help to be able to expand and grow our small business and hopefully one day create more job opportunities,” Adan Munoz, owner of SuperBurgers of Magnolia, said.

“The cost of the goods that I’m buying is going up. The shipping cost of what I buy is going up. So I’m obviously having to raise my prices just to make money, and it’s unfortunate because a lot of people can’t afford anything extra,” Amber Latu, owner of Journey Justeen’s Boutique, 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.

Zooming in

Journey Justeen’s Boutique closed its Tomball storefront Dec. 16, transitioning back to an online-only business model. Owner Amber Latu said needing time for her personal life, finding employees and the economy contributed to that decision.

“It was really hard for people to come spend money on really anything,” Latu said. Since Miya’s Munchies transitioned to pickup only, Sumiyyah Harvey said the business was able to free up resources, such as labor and time.

“Making the decision to close our storefront definitely saved us,” Sumiyyah Harvey said.

SuperBurgers of Magnolia’s economic measures include cutting costs and managing cash flow.

“We have started managing our cash flow by carefully managing what’s coming in and what’s going out,” Adan and Dreama Munoz said in an email.

The SuperBurgers owners said this allows them to budget their inventory needs and have more funds to reach consumers with better deals.

A noncomprehensive Community Impact analysis of local businesses showed the following businesses closed in 2023.

  • Antiques at Rosehill
  • Cajunville
  • DaVinci Artists Gallery
  • Tressie’s Southern Kitchen
  • Tropical Sno of Tomball

Meanwhile, the following businesses scaled back their operations in 2022 or 2023:

  • Journey Justeen’s Boutique
  • The Market
  • Miya’s Munchies
  • Woodall’s Bar-B-Que

What’s next?

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.