Challenging Summer Ahead For Minnesota Restaurants Devoted To Your Budget

If you have caught yourself glancing at a menu a little longer than usual this summer, doing quiet math before ordering the appetizer, you are not alone, and you should know that the restaurant watching you do that math is feeling the same pinch from the other side of the table.

A new survey conducted by the Federal Reserve Bank of Minneapolis and trade group Hospitality Minnesota found that bars, restaurants, hotels, and resorts across Minnesota are heading into their most important season of the year more nervous than hopeful.

Of the 119 businesses surveyed in May, exactly half said they were pessimistic about the next six months. Unfortunately, only about a quarter were optimistic. However, despite that pessimism, many places are quietly taking steps to protect your wallet.

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Summer Is The Season Where Business Should Be Booming

For most hospitality businesses, summer is the crucial stretch that carries the rest of the year, which makes this outlook hit even harder.

Over half of the businesses surveyed reported lower revenue and profits than they saw last spring, and 63 percent said profits had fallen over the year. Looking ahead, only about 15 percent expected this summer to be better than the last.

The culprits are not mysterious. Nearly 60 percent of businesses said their wholesale prices, the cost of the food and supplies they buy, had jumped 5 percent or more in a year.

More than 60 percent said tariffs had hurt their business over the past six months. Layer on Minnesota's new paid leave policy, which most owners said added administrative time and cost, and the margins start to disappear.

That Impact On Consumers May Surprise You

You would assume all those rising costs land squarely on the customer. They mostly have not. While almost 60 percent of businesses saw wholesale costs climb 5 percent or more, only about a third raised their own prices by that much.

The reason was spelled out plainly in the survey: owners are scared that if they pass the full cost along, you will simply stop coming.

So a lot of them are quietly eating the difference. "Everything is more expensive," one Twin Cities business owner wrote in the survey, pointing to food, health care, rent, and even printer ink. The instinct, over and over, was to absorb rather than alienate.

That balancing act looks different depending on where a business sits. A central Minnesota resort owner said guests are holding their discretionary spending "close to their chests."

A St. Paul entertainment business reported lower attendance as families trim their fun budgets. An accommodation owner in northeast Minnesota worried about gas prices, fewer Canadian visitors, and the threat of wildfire smoke, while a campground owner in the northwest part of the state said skilled summer help is nearly impossible to find.

One Story Behind The Numbers

It helps to hear from someone actually running a real dining room. In a Star Tribune report, Mikeya Griffin, who helped reopen the Golden Thyme Restaurant & Bar in St. Paul, is trying to remain optimistic despite the challenges.

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Griffin's team has gotten creative to stay afloat, working with suppliers, swapping in cheaper ingredients, and leaning on jazz brunches, patio nights, and neighborhood events to bring people through the door.

The St. Paul spot broke even last year, which was enough to keep all 30 of its employees.

What You Can Do About It

I was reading about this and began to wonder what I could do to help businesses near me, and throughout the state when I travel. These businesses are not asking for a bailout; they are asking for people to keep showing up.

That's a great start. Also, since most businesses are doing their best not to pass on all the rising costs to customers, maybe we could all cut them some slack this summer and be more understanding if there's a longer wait time than usual, an order isn't perfect, or a server makes a simple mistake.

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Ultimately, I plan on just visiting local businesses more. Wouldn't it be great if everyone made it a point to help pack restaurant patios, book rooms for the weekend trips up north, tip well, and bring friends?

If enough people do, the trend that has owners so nervous starts to turn the other way, and that is a win for absolutely everyone, on both sides of the table.