Chicago City Wire

Chicago’s restaurant industry is facing significant challenges that threaten its survival and the city’s economic health. The sector, which includes over 9,000 restaurants and employs more than 150,000 people, generates at least $10 billion in annual sales and supports public services through tax revenue.

The pandemic had a severe impact on local restaurants due to prolonged shutdowns that lasted over 15 months. Changing regulations led many residents to avoid dining out. Even as restrictions eased, the industry faced rising costs for food items such as beef, eggs, cheese, and vegetables. New wage mandates were introduced without exceptions for small businesses struggling to recover.

Public safety concerns have reduced demand from suburban families and tourists. The central business district has seen office vacancy rates rise above 26 percent in 2025, with negative office absorption recorded in the second quarter—over 1.3 million square feet more space was vacated than leased. This decline in downtown workers has resulted in fewer customers for restaurants during both lunch and dinner hours.

Business travel has also decreased, contributing to high retail vacancy rates along Michigan Avenue and the Loop—both standing at around 31 percent. These conditions have made it difficult for restaurants that depend on foot traffic to stay afloat.

When commercial property values fall, property tax burdens shift to residents. As household expenses rise, families have less discretionary income for dining out, putting further pressure on local establishments.

The recent elimination of the tipped wage has increased costs for restaurant operators. According to the Employment Policies Institute, this change resulted in the loss of 5,200 jobs and the closure of about 100 restaurants within a year.

Restaurants face an effective tax rate of 11.75 percent on meals when combining state, county, city, transit authority, restaurant-specific taxes, and other levies. This results in approximately $1 billion in sales-related taxes annually from the sector. In addition to sales taxes, commercial properties—including restaurants—are assessed at more than twice the rate of residential properties in Cook County.

A proposal calls for several reforms: phased wage increases with targeted tax credits; enhanced public safety measures; stricter enforcement against nuisance crimes; incentives to encourage employees’ return to offices; partnerships between schools and local restaurants for student meals; and creation of an “Emergency Relief Authority” funded by TIF surpluses to provide support during crises.

"Restaurants are gathering places. They give people their start. They give a city its spirit. Chicago cannot afford to lose them — not now, not ever," said one advocate from within the industry.

The future of Chicago’s restaurant industry remains uncertain unless comprehensive action is taken by both policymakers and community stakeholders.