Alignable: 51% Of Restaurants Can't Pay Sept. Rent (up 6%)
TREND TRACKER | DATA INSIGHTS | Boston, MA: Alignable’s September Rent Report has just been issued and after a brief dip in the national rent crisis, the Delta variant has pushed small business rent problems to the forefront again. On average, 35% of U.S. small business owners can’t pay their rent in full and on time this month, up 5% from August.
Canadian small businesses are having similar troubles, as 38% couldn’t afford their rent, up from 32% last month. These findings are based on a poll of 2,880 small business owners conducted by Alignable from 8/28/21 to 9/27/21.
Rent problems are even worse for several industries, with restaurants leading the way again. In fact, for the first time in 6 months, the majority of restaurants (51%) were unable to cover their September rent.
Rent Issues Ramp Up Over 3 Months: In-Person Services
However, as this chart below shows, the progression of rent problems for restaurants has been steady over at least the past three months.
In July, 40% of restaurant owners couldn’t afford their rent, then it lifted to 45% in August, and finally, this month, it’s up another 6% to 51%.
Other swings toward intensifying rent issues can be found among massage therapists. They had an easier time in August and July, but this month, given Delta surges, the percentage who couldn’t pay their rent more than doubled from August, catapulting from 22% to 48%.
In fact, other businesses that rely on in-person contact, including salons, gyms, and retail, also demonstrated more trouble paying rent in September, as Delta rages, new masking requirements return, and fears of contracting COVID escalate among many consumers.
What’s Happening In Key States & Provinces?
Looking at the statistics by state and province, there’s some good news for New York -- only 37% of small businesses there couldn’t pay their September rent. Though that’s still over the national average, it’s 4% below the 41% of SMBs that didn’t cover rent in August or July.
So, the new state to top the chart of rent issues is now Michigan, where 43% of small businesses couldn’t handle the rent. In addition to Michigan, several other states have witnessed the negative effects of the Delta variant on small business owners' ability to pay the rent in full and on time.
The increase in rent troubles are most alarming in Michigan and New Jersey.
- MI: 43% couldn't pay their rent (up 15% from August)
- TX: 39% (up 7%)
- NJ: 38% (up 14%)
- GA: 38% (up 6%)
- CA: 37% (up 5%)
- FL: 33% (up 4%)
- VA: 32% (up 1%)
- CO: 29% (up 3%)
Slightly Bigger Struggles In Canada
Looking at our neighbors to the north, as noted above, 38% of Canadian SMBs couldn’t pay their rent, compared to 35% in the U.S.
And three provinces are showing ongoing issues, too, though there’s a slight improvement in Ontario over August’s figure:
- BC: 50% couldn’t pay their rent (nearly doubling from 26% in August)
- AB: 34% (up 5%)
- ON: 34% (down 3%).
Silver Lining Solutions Revealed
No doubt, rent issues have exacerbated for many small business owners. However, to highlight other angles of the rent discussion, we partnered with the International Council of Shopping Centers (ICSC) on this poll and added a few questions to help point landlords concerned about their renters' welfare in the right direction.
In particular, we asked: “What’s the most important step a landlord can take to help in the COVID Recovery Process?”
Nearly half of the respondents with landlords, 48%, said offering some sort of rent assistance would be the most welcome gesture.
After that, nearly a third of the respondents, 28%, said they would like their landlords to renegotiate their leases.
And finally, 12% wanted their landlords to establish better safety protocols for their tenants, and another 12% hoped their landlords would ramp up promotions encouraging more foot traffic to their stores and restaurants.
18% Of Landlords Are Helping
Other findings from this survey indicated that 18% of landlords are already trying to help their tenants with rent fixes and other measures to foster their recovery, which is good news.
Specifically:
- 7% have helped tenants apply for PPP assistance
- 5% have deferred rent for tenants
- 4% reduced rent payments
- 2% offered rent abatement.
"The economic impacts of the pandemic have been profound for small businesses as many were forced to go dark during government mandated closures," said Stephanie Cegielski, Vice President Research & Public Relations at the ICSC. "The toll this took on sales resulted in difficulty paying rent. While many landlords, especially those with a large portfolio, were able to provide rent relief to small tenants, there are many more who are small businesses themselves and don’t have the means to provide relief. It is imperative that both tenants and landlords receive assistance to ensure a positive outcome on the other side of the pandemic."
For more details regarding Alignable’s September Rent Report, please contact me at chuck@alignable. To see other polls we’ve conducted since March 2020, please go to the Alignable Research Center.
About The Alignable Research Center
Alignable is the largest online referral network for small businesses with over 6.5 million members across North America.
We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.
About ICSC
The member organization for industry advancement, ICSC promotes and elevates the marketplaces and spaces where people shop, dine, work, play and gather as foundational and vital ingredients of communities and economies. ICSC produces experiences that create connections and catalyze deals; aggressively advocates to shape public policy; develops high-impact marketing and public relations that influence opinion; provides an enduring platform for professional success; and creates forward-thinking content with actionable insights – all of which drive industry innovation and growth. For more information, please visit www.icsc.com.
Comments (1-10)
I frequent restaurants often. Too often actually many may say. But being single and working long uncommon hours can do that. That's my excuse anyway;-)
Stating that, 51% of restaurants could not afford last months rent from their monthly grouse income is an amazing number that does not surprise me somehow. I noticed a big reduction of restaurateurs/clientele for all of September. I attributed it to the the end of the summer, school year start and and religious holidays.
With Fall and Winter on the horizon, things will not look better I fear. January February and March is always a test of fortitude for restaurants.
My heart goes out to you restaurant owners. Keep a positive outlook always.
Good luck.
Robert Young
Robert Young's Montreal Home Inspection Services Inc.
Prices have risen everywhere in every town and every state. Yes, I hear you about having smaller portions and lower prices. Wouldn't it be better to have more customers who want the lower price than some having to pay exorbitant prices. During the last year more people learned how to cook better and healthier. It really saves when you can make it yourself and do certain things yourself.
Thx Chuck, great information. What would really help would be our representatives in DC actually earn their salaries and come up with solutions for these problems.........
The restaurant industry has been hit hard and struggling in many ways. Lack of available financing, staffing issues, and let's not forget lockdowns and local rules. Support the restaurants you want to see stay open before its too late.
Well the real winners are the fast food places. I went to a family restaurant here in town(they make home made schnitzel). Had to give contact info-ok no problem. Less than 2 weeks later went to one of the busiest mac ds behind their backs in town. No contact info for me and 2 other tables that sat close by.
For the small guy it's hard to compete when the fast food places get a pass while family run restaurants have their hands tied
Our restaurant problems are staffing! We have the food/beverage, facility, basic expenses covered, and our customers grow weekly, but the lack of staffing is an extreme problem. Our exceptionally devoted crew are well overworked and doing their very best, but are in dire need of assistance to keep up with the public demand. The fear of losing even one of them is real!! Just finding an applicant is a real struggle, much less finding one that is truly looking for employment. But management remains positive, keeps ads running, search every avenue in hopes someone will apply.
If anyone has any suggestions, we are certainly open to them!!
I buy at locally-owned restaurants and try not to buy at the big chains.
If restaurants would serve smaller portions at lower prices, we could solve obesity and the expendable income economy. Portion sizes are ridiculous and restaurants are still throwing out product.
Got any more information about why construction is on this list ? What makes up the category ? New homes, remodelers, individual trades, etc ? Sometimes it is difficult to tell what reports are really saying if there is no legend.
There was a boom in new housing all summer, but prices for materials were "through the roof"... are the honorable contractors who stood behind their estimates and contracts in 2020 the ones that cannot pay rent in 2021 ?
I checked on the NAHB site to see the history of new home starts and although Sept new home starts is flat, the overall trend has been up for a while.
We try to eat out at least 6 times a week. I also try to tip at 25% or more because the wait staff is hurting as well.