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MN restaurant owners warn: We're being pushed to the brink
Hospitality Minnesota released its 2026 State of Hospitality report, revealing that the state's hospitality industry is "stressed and on the brink". Operators are facing a complex economic crisis driven by rising wholesale food and equipment prices, increasing labor costs, tariffs, and metro regulations.
ST. PAUL, Minn. (FOX 9) - Minnesota restaurant owners say 2026 could be the year they are forced to make tough decisions, like whether to close, as a new report highlights the struggles the industry is facing.
Restaurants pushed to brink
What we know:
The new State of Hospitality Report from Hospitality Minnesota highlights the immense challenges being faced by restaurant owners in Minnesota.
Owners say challenges are coming from all directions. The report points to economic uncertainty, including lower profits, increased costs, staffing challenges, rising wages, and less traffic.
On top of that, restaurants have been challenged even further in the first quarter of 2026 by the federal surge in Minnesota.
Dig deeper:
On top of that, the report points to increased regulations in Minnesota compared to neighboring states.
The report says despite similar economic conditions in the region, neighboring states have seen growth in the hospitality industry, while only Minnesota and Iowa have slowed.
In Iowa, most of the closures have been in the Des Moines area.
What are the solutions?
Big picture view:
Hospitality Minnesota is pushing lawmakers for some solutions to lessen burdens on restaurants.
In the short term, they are hoping for "swipe fee" reform – the fees paid on credit card transactions.
"Right now, every restaurant is paying a swipe fee on taxes and tips," explained Angie Whitcomb with Hospitality Minnesota. "That's not their revenue, and they're paying the fee on it. Reforms like that, common sense, long-term policy reform that will relieve some financial pressure of money going out of their pockets every day."
Whitcomb is also asking for an adjustment to the liquor posting law and a fix to the new paid leave law for seasonal workers.
What they're saying:
"It's hard not to stay positive with everything going on, but we are in trouble," said Andrew Kraft, chef and proprietor of Bungalow Club in Minneapolis. "I don't want to be an alarmist, I don't really know how to be an alarmist. But the truth is traffic is down. Profitability is harder to chase every day, and that directly affects my staff, myself and everyone from staying in business."
"When prices go so high and the revenue is not there, something breaks. The math doesn't work. In my view, everything is breaking on the back of small operators," said Gustavo Romero, chef and owner of Oro by Nixta. "For my staff, it means less hours, more stress, and a lot of uncertainty. They don't know what's going to happen. I don't know what's going to happen. I don't know if I'm going to be able to open. For us, it's just continue to fight every day, just stay open."
The Source: Information provided by the State of Hospitality Report and FOX 9 reporting.