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.