A Table Outside? More Diners Say No Way
Restaurants say heat waves, smoke have hurt their outdoor dining business
3 min
Stretches of severely high temperatures across the U.S. are taking a toll on restaurants.
Customers are avoiding patios during heat waves, cutting into a key source of summertime sales for many restaurants, owners said. Visits in July and August declined from earlier in the year, industry data showed, with chains including Chuy’s and Cheesecake Factory reporting a decline in outdoor business this summer.
“No one’s sitting out in the patio at 100 degrees,” Steve Hislop, chief executive of Texas-based Chuy’s, said during an Aug. 3 earnings call.
Utility expenses are also rising as restaurants run air conditioning at full blast for long stretches of time, operators and industry groups said.
Temperatures climbing to the highest levels in recorded history this summer have hurt hospitality, sports, agriculture and many other businesses. In states such as Texas, weeks of days topping 100 degrees are expected to reduce overall economic productivity.
Restaurants are contending with heat and smoke as many operators are fighting for sales from cash-strapped consumers, and dealing with high inflation in food, labour and other costs.
Diners overall at restaurants in Arizona, Florida and Georgia dropped between 6% and 8% in the first part of August compared with last year’s period, according to OpenTable. The reservation tech company also recorded diner declines in other states running hot this summer, including Texas and North Carolina.
“This summer does feel different,” said Kelsey Erickson Streufert, chief public affairs officer for the Texas Restaurant Association trade group. “It’s a little tougher to get people to come out.”
Employees working at restaurants and bars dipped 1.5% in July compared with the month prior, with steep declines in cities such as San Antonio, New Orleans and Phoenix that recorded high temperatures during the month, according to Homebase, a small business workforce app. The declines likely stemmed from extreme temperatures disrupting consumer spending and foot traffic, Homebase said.
Worker advocates are increasingly making heat an issue in campaigns for improved conditions for restaurant workers. Some are pushing for better enforcement of existing standards and additional federal indoor heat regulations to provide employees breaks and water when temperatures rise.
“We’ve seen 86 degrees on the coolest side of the kitchen,” said Ariana Lingerfeldt, a cook at an Asheville, N.C., restaurant who is a member of the Restaurant Opportunities Centers United worker advocacy group, during an Aug. 9 event pushing for more heat standards. “The air conditioner is unable to keep up with the equipment.”
Some restaurant operators said they are giving their workers more water and rest breaks, since kitchen temperatures can climb steeply despite air-conditioning.
Many restaurants set up patios in the early days of the Covid-19 pandemic, and have come to rely on them to drive summer sales. New York City, for example, is poised to make expanded outdoor dining in roadways permanent from April to November, and supporters say patios have helped restaurants maintain sales and jobs.
Now, some restaurant owners said those patio sales are drying up when temperatures surge, or wildfire smoke blows.
“When the sun’s on it, it’s literally scalding out there,” said Marc Hochmuth, general manager of City Social restaurant in downtown Chicago, which has a patio. Hochmuth said his business dropped about 20% overall when temperatures soared this summer.
Zoe Dean-Neil, a 20-year-old Pennsylvania resident who was on vacation in Chicago in August, said she opted to eat inside in the air conditioning after a day walking around in the heat. “I don’t want to sit outside and sweat,” she said.
Smoke drifting into the U.S. from Canadian wildfires also affected business at restaurants in parts of the country earlier this summer. John DuBuque, a 31-year-old management consultant from Chicago, said he tried to have a glass of wine outside during one heavily smoky period in the city, and regretted it.
“It was not the vibe,” said DuBuque, who said he now makes more outdoor dining decisions based on the air quality index.
Restaurant owners are trying to work around the weather. Sue Rigler, owner of Hundred Mile Brewing Company in Tempe, Ariz., said she is misting and putting extra fans on her outside beer chilling units to keep them cool. She has also cut back on labor in response to slower sales that she attributes to the heat.
“July was a really hard month,” Rigler said. “We finally got a break at 108, and they call that a break.”
Tom Hutchinson, owner of La Posta de Mesilla and Hacienda de Mesilla in New Mexico, said his hotel and restaurants are promoting cold beers and margaritas to attract customers. He is also hoping to keep people coming to the outdoor space surrounding their adobe building at night when temperatures may fall to the 90s.
“We don’t have humidity in our state and you can tolerate that,” he said.
Longer term, restaurant operators are trying to adjust to more climate-driven variables.
Avram Hornik, owner of the FCM Hospitality group of restaurants, bars and outdoor pop-up venues in Philadelphia, said his sales are down 30% this summer because of weeks of heat and rain. Smoky conditions in June didn’t help, he said.
“I look at it such as being a farmer. The weather controls all,” he said.
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Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
4 minA sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.
The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.
The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.
The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.
This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.
The debt behind the AI build-out
Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.
Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.
JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.
The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.
That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.
A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.
When interest rates rise, those assumptions become less forgiving.
Inflation changes the calculation
September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.
The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.
CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.
Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.
Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.
The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.
China adds another source of pressure
Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.
Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.
The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.
That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.
A reset rather than the end of the boom
The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.
What has changed is the market’s willingness to overlook the price and financing structure of that growth.
The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.
More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.
For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.
Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.
The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.
Fact box
Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026
Philadelphia Semiconductor Index: Down approximately 11.4 per cent
Micron Technology: Down approximately 14.6 per cent
Samsung Electronics: Down approximately 18 per cent
SK Hynix: Down approximately 24 per cent
US September inflation: 3.7 per cent annually
Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion
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