Chicago City Wire

Chicago Bars is raising concerns about the challenges faced by the hospitality industry in the city, pointing out that neighboring suburbs offer lower sales taxes, license fees and city-mandated payroll costs for competing bars and restaurants.

This has drawn attention to the competitiveness of Chicago's hospitality sector and the potential disparities affecting businesses within the city.

“Hospitality in Chicago is a tough industry. Even tougher when almost every competing bar and restaurant in your adjacent suburbs has lower sales taxes, license fees, and City mandated payroll costs,” Chicago Bars reported on X.

 

According to the Tax Foundation, Chicago’s 10.25% sales tax rate is the second highest of any city in the entire country.

The City of Chicago outlines different classes of liquor licenses to regulate establishments serving alcoholic beverages and ensure that applicants apply for the correct type of license.

Among these categories, the Tavern License costs $4,400 per year and is necessary for bars, nightclubs and similar establishments that primarily serve alcohol.

The cost of business for bars is expected to go up as well after a Chicago city panel approved a measure that will phase out the tipped minimum wage by July 2028, ensuring that all businesses pay their workers the same minimum hourly wage regardless of tips earned.

A compromise, crafted by Mayor Brandon Johnson and supported by the Illinois Restaurant Association, will provide restaurants with five years to adapt to the change, with annual 8% raises for workers who rely on gratuities starting July 1, 2024.