2023 Member Survey Findings

A year after passage of Initiative 82, significant numbers of DC restaurants are contending with dwindling customer traffic and diminishing revenues, threatening the viability especially of local independent restaurants. 

“Our neighborhood restaurants are caught between a rock and a hard place,”said Shawn Townsend, President and CEO of the Restaurant Association Metropolitan Washington (RAMW). “Costs have soared, but diners understandably can pay only so much for a meal.” 

“Thankfully DC Councilmembers can help,” Townsend said.

More than one-third of restaurants are experiencing a drop in sales and traffic. 

Large numbers of restaurants report declines in both sales and customer traffic, according to a survey of RAMW members:*

• Summer sales fell for more than one-third (35%) of restaurants compared to last year, dropping an average of 31%.

• That decline expanded the following month. In September, 40% of restaurants reported a downturn in sales, with an average decline of 28%. 

• Customer traffic is following a similar path. Summer traffic fell for 44% of restaurants from last year, dropping an average of 28%. 

• September customer traffic shrank 46% from the prior year, averaging a decrease of 27%.

The sharp drops in revenue and traffic report reflects the findings of a summer survey** of DC diners about how higher prices are changing their dining habits:

• 52% of DC diners are eating at home more often because of increased prices.

• 43% of diners are eating out less often.

• 32% of diners are eating in Maryland and Virginia more often.

Restaurants have raised prices, but it’s not keeping up with inflation.

Nearly all – 96% – of restaurants have increased prices since the outbreak of the pandemic, but inflation is outpacing those increases.

• 81% of restaurants are paying more for ingredients than before the pandemic. Food costs are on average 23% higher than in 2019. 

• 91% of restaurants are paying more wages, on average 25% more.

• 58% of restaurants have higher occupancy costs, averaging an increase of 18%. 

• However: Menu prices have increased on average just 16%. 

75% of restaurants are less profitable than before the pandemic.

Three in four restaurants are earning less income than before the pandemic outbreak in March 2020. Profitability is down an average of 34%.

Strengthening liquor liability law is good for business and community. 

“Now is the time for DC Council to act to stand-up our local restaurant community,” said Townsend. “One policy that would lend a big helping hand is reforming liquor liability insurance.”

DC is the second-worst*** in the US in liquor liability insurance rankings, costing in some cases 100 times more than in Maryland or Virginia. Councilmembers Brooke Pinto and Christina Henderson in January introduced the Dram Shop Clarification Act, which would reform liquor liability law.

Dram Shop reform is strongly supported among DC restaurant and bar operators: 

• 81% of operators believe DC liquor liability law should be brought in line with the rest of our region and US.

• 73% believe if liquor liability insurance was affordable, it would be accessible to more operators.

• More than half (56%) feel the cost of liquor liability insurance is a significant barrier to growing their business.

Local Neighborhood Restaurants Need Help Now

“As the survey shows, many industries may have moved on from Covid, but our neighborhood restaurants are feeling its effects every day when we pay for food, rent, and payroll at historic highs,” said Townsend.

Last year DC also became the first city or state in more than 20 years to eliminate the tipped wage. This ongoing period of disruption, economic uncertainty, and realignment threatens all restaurants, but disproportionately jeopardizes small, independently owned businesses, especially those owned by entrepreneurs of color. 

“Thankfully Councilmember Kenyan McDuffie this year introduced the Workers and Restaurants Are Priorities(WRAP) Act, which would help our local independent restaurants finally turn the corner on the pandemic, successfully transition from the tipped wage, and position our industry to thrive one again,” said Townsend. 

Among other measures, the WRAP Act would: 

• End the tipped wage two years sooner than scheduled. 

• Waive sales tax on service charges for small groups.

• Establish a public education campaign. 

Ending the tipped wage early helps to speed up settling into the new normal. 

“From a restaurateur's perspective, stretching out the end of the tip credit makes it needlessly complicated, requiring operators to remodel their labor costs each time an increase takes place,” said Townsend. “With each remodeling comes a new need to educate our staff and guests about how it all works – over and over again.”

Tipped workers would also earn an additional $12,480 in wages by ending the tip credit early.

Ending the tipped wage sooner than scheduled has strong support among operators: 

• 73% of operators believe speeding up the end of the tip credit will help to speed up settling into a new normal, where diners can focus on dining rather than service charges and tipping.

• 53% of operators feel speeding up the end of the tip credit helps to level the playing field between small independent restaurants and large restaurant groups better able to absorb increased costs.

Waiving sales tax on service charges helps DC restaurants be competitive. 

“Dining in the District is more expensive than ever, not only because of inflation, but also because our 10% meals tax is far and away the highest in the region,” said Townsend. “Waiving sales tax on the service charge portion of the bill gives diners a little bit of relief, and hopefully encourages them to visit their favorite neighborhood restaurant more often.” 

Restaurant and bar operators agree: 

• 86% of operators believe waiving sales tax on services charges would help their DC restaurant to be more price competitive with Maryland and Virginia restaurants.

• 81% said waiving sales tax on service charges would encourage diners to visit DC restaurants more often.

• 70% of operators currently use or plan to use service charges to pay employees above minimum wage. 

• Nearly half – 47% – currently use or plan to use service charges to offer employees benefits such as paid vacation and health insurance. 

95% of operators believe public education is needed. 

Nearly all operators feel a public education campaign is needed to explain what the end of the DC tipped wage means for operators and diners, similar to other education campaigns following changes in law.

“The challenges for our local restaurant industry at this point in time are critical,” said Townsend. “The Dram Shop Clarification and Workers and Restaurants Are Priorities Acts are two vital legislative proposals that can provide real relief. 

“We look forward to DC Council passing both without delay.”

* The RAMW member survey of 287 restaurants was conducted online Sep. 28 to Oct. 8. Respondents were mostly casual full-service restaurants (69%) and independently owned and operated (95%). Survey respondents were also:

• 66% Women owned restaurants 

• 14% Hispanic owned restaurants. 

• 11% Black owned restaurants. 

• 11% Asian Pacific Islander owned restaurants. 

• 6% Veteran owned restaurants. 

** The Morning Consult online poll was conducted for the National Restaurant Association Aug. 14 to Sep. 5 among a sample of 944 adults in the Washington, DC area who have dined at a restaurant in the past 3 months. 

*** Since Councilmembers Pinto and Henderson introduced the Dram Shop Clarification Act in January, the Alabama Legislature passed dram shop reform, changing their insurance ranking to a 5. DC is now the second-worst in the US in insurance rankings.