Restaurants in River North cut their operating hours more during the COVID-19 pandemic than restaurants in any other part of the country, according to a new survey.
Some restaurants have stopped serving lunch altogether. Some restaurants are now closed several days a week to remain profitable.
On average, River North restaurants in the 60654 ZIP code cut 20.2 hours per week between October 2019 and October 2022, according to an analysis by Datassential, a Chicago-based firm.
That figure massively outpaces the national average drop of 6.4 hours per week over the same period, the analysis shows.
In terms of operating hours cut, New York City has 12 of the top 15 ZIP codes — but the River North was higher than any of them, taking the top spot.
But why were River North restaurants most vulnerable?
Restaurant owners point to a few factors: inflation, a persistent lack of workers, changing consumer habits. But the biggest issue may be workers’ sluggish return to downtown.
“River North got hit the hardest because it was so close to the financial district — but it never really brought people back to work,” said Sam Sanchez, CEO of Third Coast Hospitality.
Sanchez hasn’t held lunch service at his two River North restaurants, Tree House Chicago and Moe’s Cantina, since COVID hit.
Sanchez said he’d go out of business if he didn’t cut those lunch hours, since labor makes up so much of his operating costs. And he hasn’t seen crowds return for happy hour either.
“I’m not going to open for lunch if I only have 10, 20, 30 tables throughout the lunch period,” he said. “And people don’t go out late at night on Monday, Tuesday, Wednesday. So you don’t open” then.
Restaurants are also closing earlier nationally. On a typical Wednesday evening, about 41% of restaurants are open at 9:45 p.m., compared with 56% in 2019, the survey found.
Sanchez hopes more people return to work in the spring.
“We need a density of people. We need traffic. We need new ideas. We need to draw people to River North,” he said.
Workers have remained stubbornly absent from the central business district since COVID hit nearly three years ago.
The office occupancy rate is still less than half of what it was in 2019, and pedestrian traffic is two-thirds what it was then, according to an analysis by the Chicago Loop Alliance. Developers seeking to adapt to the new normal have proposed turning empty office space into apartments to revive the once-bustling La Salle Street corridor.
One positive sign: Business events and conventions have begun returning to Chicago, Sanchez said.
But he’s preparing for a rough winter. In January and February, he’ll probably keep his River North restaurants open only three days a week.
Aside from a lack of customers, restaurants have been reeling from a shortage of workers.
“A lot of owner/operators are saying to me, ‘We really need more team members,’” said Sam Toia, president of the Illinois Restaurant Association. “When you’re lacking team members, you’ve got to cut your hours.”
Across the country, two out of three restaurants were understaffed in August, according to the National Restaurant Association.
Kevin Vaughan owns the Emerald Loop, 216 N. Wabash Ave., and the Chicago Brewhouse on the Riverwalk. He, like others, has struggled to attract workers.
“It’s a tough business to be in right now. We work nights and weekends. It’s a tough, customer-facing job,” he said.
Many of those potential workers are opting to work in the gig economy, he said.
“We offer a lot of flexibility, but the gig economy offers even more flexibility,” said Vaughan.
He’s reached out to community colleges to attract workers so he won’t have to cut hours. “About 50% reply to interview requests. And when we schedule interviews, we’re batting about 50% after that,” Vaughan said.
The Illinois Restaurant Association has tried to address the worker shortage by advocating for immigration reform. Declining immigration under the last two presidential administrations may be behind the lack of available workers, Toia said.
He wants working visas for hospitality workers, just as the U.S. does for farm workers. That idea could gain bipartisan support because this staffing problem hits red and blue states alike, he said.
Restaurants have also cut their hours to accommodate changing consumer habits. Customers are ordering takeout more and preferring to eat at home, either as a way to save cash or remain COVID-safe.
Takeout and delivery rates have nearly doubled since before the pandemic, and that has cut into restaurants’ revenue, Toia said.
Ordering takeout and delivery “was starting to become fashionable before the pandemic, but it really got legs during the pandemic. A lot of people have not backed off of that,” Toia said.
Even though some folks are ordering delivery from those restaurants — through DoorDash, Uber Eats and Grubhub — the restaurants see less revenue due to app fees and lost beverage sales.
“It’s cheaper too because you might have a bottle at home. If you’re going to a restaurant, you’re purchasing that bottle of wine,” Toia said.
Vaughan has avoided cutting hours to this two restaurants because he still sees traffic from nearby hotels and Riverwalk tourism.
Restaurants are struggling more in areas that rely on downtown workers who haven’t returned in person, both in River North and the Loop, he said.
“Emerald Loop is in a sweet spot there,” Vaughan said. “If I was more Loop-centric, I’d be in big trouble. If I was down in the middle, even a block farther south, I would have a big disaster on my hands. I’m lucky to have a lot of hotels around me,” he said.
“Some of my peers who operate more in the Loop, and have more business [that’s] clientele-driven, are still suffering greatly,” he said.
