Inflation, labor costs hurting restaurant business in Pacific, Mission beaches

Union Kitchen Tap at Garnet Ave closed earlier this year Photo by Thomas Melville Beach Bay Press PACIFIC BEACH Turning a profit while coping with inflation and the escalating cost of everything is proving to be a tall order for beachfront merchants in Pacific and Mission beaches There are numerous vacancies for example on Garnet Avenue in Pacific Beach Specific prominent businesses that have shuttered in recent weeks include Union Kitchen Tap Crushed Cabo Cantina and World Curry While Sunny Lee executive director of the society s business improvement district Discover PB noted There has also been a growing number of businesses moving into vacant storefronts a multitude of of the ones that remain open are facing challenges Commercial Realtor Tony Franco president of the Franco Realty Group in PB cited multiple reasons for vacancies rising in the beach business district The cost to have employees has gone up Minimum wage payroll taxes and workers compensation insurance have gone way up he mentioned The cost of business insurance and property liability insurance has tripled Franco pointed out that commercial properties were once paying low liability insurance of around annually Now we are seeing rates that start at and up This cost for the landlord gets passed down to the business through their triple net lease agreements Franco cited slow permitting as another difficulty holding beach merchants back If someone wants to put a grease trap and hood so they can open a restaurant it could take over a year to get permits he mentioned During this entire time a business owner will have to keep paying rent This is why we do not see new restaurant spaces open up The process is too expensive Lahaina Beach House at Oliver Court Photo by Thomas Melville Beach Bay Press Times of San Diego reached out to two restaurant operators Mark Oliver managing partner of Pueblo at Hornblend St in PB and Eric Christiansen co-owner of Guava Beach Bar Grill at Mission Blvd in Mission Beach Both men agreed times are hard and likely to get harder given the current business environment Noting that sales have been down year-over-year at Pueblo Oliver noted Interest rates and inflation over the past couple of years have reduced discretionary income and spending on a national level The market system is not as strong as it has been made out to be Inflation has made dining out more costly and diners are opting to eat out less often Economic uncertainty with changing leadership policies is another reason noted Oliver He cited statistics from the Department of National Progress Tourism Economics which originally forecast a increase over for international arrivals in But now a decline in air passage is forecast Canadian air progress is down he revealed adding in his view that the likely reasons are immigration policies detentions visa delays arrangement tensions Forbes Magazine forecast in May a -year low in journey planning due to job insecurity from DOGE layoffs fears of recession and tariff worries People are choosing to scale back on sessions Eric Christiansen of Guava Beach concurred with Oliver s assessment of the difficulties of doing business as a restaurant owner in He spoke of the challenges of operating effectively while walking the ever-thinning line of profitability Profit margins continue to slip in the face of inflation increased cost of goods sold and a seemingly never-ending increase in minimum wages including tipped employees etc Christiansen noted that profit margins used to be - The national average is now - he declared That diminished profitability leaves little room for error There are other factors too announced the Guava Beach co-owner Our insurance increased in one year disclosed Christiansen Nearly everything we purchase to operate such as food paper goods cleaning supplies beer wine and liquor continues to cost more The aftermath is that restaurants have no choice but to continue to raise prices change their menus offerings limit hours of operation etc Christiansen pointed out that Guava Beach gets a lot of tourists throughout the summer He noted that Plenty of of our guests especially from the Midwest are shocked that a draft beer costs - saying We pay in Wisconsin But as Christiansen reported Wisconsin s minimum wage is hour and if you earn tips the employer only has to pay them hour That s a huge disparity from the hour in San Diego I think nearly everyone has noticed that more and more venues are struggling to survive and unfortunately particular are forced to shut their doors and cut their losses Nonetheless Christiansen remains hopeful Despite these challenges I still love the restaurant industry the dynamics of doing business the wonderful staff I get to work with and the fantastic patrons we get to serve and hopefully make smile daily he revealed In Franco s estimation there are other factors too holding beachfront merchants back Alcohol Beverage Control will not issue new licenses in Pacific Beach he stated while adding that other San Diego communities like North Park South Park Ocean Beach and Little Italy have seen tremendous increase with amazing restaurant operators obtaining new ABC licenses Commercial landlords are used to getting a higher rent Franco noted Now that their vacancy is here they want the previous day s rent and the commercial landlords have not put any money into fixing up the space Multiple buildings in PB are not ADA-compliant and landlords do not want to spend the money to make their property ADA-compliant Oliver of Pueblo spoke of the lessons he s learned and what he s doing to cope with an increasingly tough business circumstances We are finding out just how reliant we are on tourism to the beach area he commented Crowded beaches during the day do not dependably correlate to crowded restaurants during the night Oliver added The cost side of running a business is being hit hard from every aspect It isn t much different than a homeowner or head of household who is seeing insurance interest rates utility grocery and maintenance costs all rising Add to that the rising cost of the amount of labor that it takes to run a restaurant and you can understand why our industry is in a pinch And the financial sector is not exactly in a mode that allows you to adjust by raising prices to cover the costs We managed the summer season with fewer staff We are reviewing our menu selection to make sure that we are in line with current dining and drinking trends And we are assessing our marketing strategies to draw locals from areas outside of Pacific Beach