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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The federal budget has rattled property investors. But the biggest mistake isn’t the tax changes, it’s the conclusion many are drawing from them.
2 min
The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
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