Economists (or anyone else) - Stores & Restaurants Closing. What Does It Mean?

VintageBetter

VintageBetter

Senior Member
In my area, the news has told tales of many local discount stores shutting down. They either close down many sites to try to cut costs, or they close all stores and go belly up. One chain, Big Lots, is considering bankruptcy, but they are shuttering some stores first to see if they can survive.

The 99 Cents Only stores already closed. Now I hear news of Buca di Beppo also closing down over 15% of its locations and I always thought they were very popular and doing fine.

A local sushi place, so very popular for years, now has a COUPON in the mail! A COUPON, like it’s a mere pizza joint and not a hot sushi place. This is the first coupon I have ever seen from them in four years.

SO - what’s up!? Are these creeping markers signs of a “correction”, AKA recession ahead?
 

I just noted a store closing today. I had no idea. Yet they are building another drive through coffee place and a chicken place. Fast food seems to sell.

Just don't close my favorite thrift stores, WINCO or Trader Joe's. I'll survive.
 
If a restaurant helps you get laid after a date then the doors stay open. :giggle:
Restaurants are mostly popular because of the atmosphere. Adult drinks are quadruple the price of what you can buy at Walmart. Most food you can make at home for a lot less.
They are definitely not a necessary business.
 
The Houston general area has grown by leaps and bounds. Businesses opened everywhere, and so many just didn't have a chance of survival, with high rents and an overly competitive market. As my haircutter says, I want to leave this shop and go on my own, but the cheapest store front I've found is $2,000 / month. I couldn't possibly cut enough heads to succeed!

I really hated to see so many old restaurants shut down. The sad thing is, the young people of today just don't go to "sit down" restaurants, and want food delivered or choose fast food / take out. The regular restaurants we go to (we eat out lunch every day) all have told us they do far more business with take out vs. eat in.

And another factor of businesses closing down is the "smart phone". Consider the demise of book stores, hobby shops, craft stores, etc... The brick and mortar stores are going fast, for you just don't need one to sell online.

I believe the 2-3 years of Covid definitely spurred all the above on, for so many of us have turned to Amazon and Ebay, etc., to get what we need and have it brought to our door.

Personally, I really miss the way it was...
 
I think many times businesses fail because of over saturation, there's not enough population density to staff the businesses properly or generate enough sales to be profitable.

How many mattress stores do we need? Or cell phone stores? Coffee shops? Winery?Grocery stores? Restaurants? Brew houses?It's great to have options but the redundancy I see is just rediculas.

Sure at peak times all the businesses may be busy, but a few busy hours a week doesn't necessarily make a business successful.
 
It must take more profit to support a store than a plain warehouse. They have to charge more for the overhead. The only time I go to a store is if I have to see what I'm buying or talk to someone who can explain the product to me. Restaurants... I just don't go to them anymore since the pandemic. They are unnecessary. I have been venturing back into the movie theaters but only during less crowded times when it's quiet.

I don't think this has anything to do with recession. We aren't even in one, at least not yet, and stores and restaurants have weathered many a recession in the past. I believe restaurants are suffering more from inflation, which is pricing them out of existence. Inflation is hurting a large portion of the population. For people in the middle, it's an annoyance, but for people at the bottom, it forcing people to choose what is necessary.
 
C50 said:
I think many times businesses fail because of over saturation, there's not enough population density to staff the businesses properly or generate enough sales to be profitable.

How many mattress stores do we need? Or cell phone stores? Coffee shops? Winery?Grocery stores? Restaurants? Brew houses?It's great to have options but the redundancy I see is just rediculas.

Sure at peak times all the businesses may be busy, but a few busy hours a week doesn't necessarily make a business successful.
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I think this is the problem where I live. The shops in the high street are nearly all food outlets and coffee shops. It's impossible for all of them to thrive. I think that many of their patrons are unemployed. They buy a cup of coffee and then sit with it by a window watching the world go by and making one cup of coffee last as long as possible.
 
black-friday-shoppers_zpsqpeze3be.gif
 
Malls here in N.J. were having problems keeping stores and some became like vast wastelands. I think one reason is the rent is probably too expensive. Another reason is more people are finding it convenient and cost effective to shop online. Often, it saves both time and money. The prices in mall stores are ridiculous. For instance, I found the Sketchers sneakers I wanted on Amazon for half the price the Sketchers store in the mall was charging.
 
Pizza eaters are fickle. A new place opens and there’re lineups, because it’s the latest and greatest. Two months later a different place opens and the lineups are there. Rinse and repeat.
 
Please note this is only from my viewpoint, living in coastal Northern CA, San Francisco Bay Area:

There are an enormous # of restaurants in our region. National media may show homeless camps galore, but remember this is a Mediterranean climate. Temps may drop below freezing but they don't stay there after the sun comes up. In SF the income guideline for low income is $104,400 for a single person and $149,100 for a family of four.
  • Even in my nearby city which is noticeably less expensive than SF, median family income is $122K. Independent restaurants abound: many specialized (limited menu), many fast/casual (no or limited dine-in). The failure rate is 80%; small business failure has always been high in the US and possibly always will be.
    • I do reviews of restaurants we visit - strictly for my own reading and a few friends I share with - and when I look over my records, the closure rate is as high as the 'new opened' numbers. Entrepreneuers are ever hopeful...and that's a GOOD thing. We try to buy local whenever possible, to support not just restaurants but also gift items, food businesses, etc.
  • Price is not as important as convenience, for us and our friends. Spouse and I are rampant spenders. We dine out a lot (my hobby) and we also have a large discretionary budget where we can indulge in our personal interests. The majority of our spending, except for dining out, has shifted to on-line.
    • Almost all our friends are younger than we are, and they too, shop heavily on-line. For them, they work and it's too time-consuming/tiring to schlep from store to store.
    • For us, we are brand-sensitive - we prefer certain brands for specific items, and going to a store but finding it lacking what we want, is not worth our time. So buying on-line eliminates numerous trips = saving time, gas, and energy. We hardly ever visit big chain stores or traditional malls.
Recessions do happen. They have been happening pretty much every decade since I started working, back in 1970. The US has recovered faster and more strongly than other countries every single time. They are painful, but inevitable. We currently have the strongest economy in the world, despite our many problems (I can't think of a country that doesn't have any, LOL!).

Are we due for another recession? Certainly. Just a question of what triggers it and when it happens.
 
Knight said:
It means there isn't enough profit to stay in business.
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But the question is why?

There are many moving parts to this. Megastore arrival and competition. Online shopping competition. Real estate costs. Utilities costs. Supplier costs. Taxes and regulation. Labor cost and scarcity. Facility maintenance costs. "Shrinkage" (crooked people shoplifting, often as roving mobs of thieves). Inflation - a double whammy that hits the stores and their customers.

There is also the demographic collapse. The heaviest consumers are pre-retirement, Generation Jones is retiring or retired now. Retired people spend less on stuff. That leaves Gen X and down in age, and there just aren't as many of them.

Not only does this hit retail, but it also means less tax revenue. That means a lot of fancy infrastructure just won't keep being built and already existing gentrified infrastructure won't be maintained. Towns are going to slide down into "Mayberry." Cities are going back to ghettos with wash strung out on the fire escapes to dry, etc. Retirees, already living longer than before, will become a greater and greater burden. Not just financially for those relying on entitlements, but also competing for a shrinking health care services worker population.
 
dilettante said:
But the question is why?

There are many moving parts to this. Megastore arrival and competition. Online shopping competition. Real estate costs. Utilities costs. Supplier costs. Taxes and regulation. Labor cost and scarcity. Facility maintenance costs. "Shrinkage" (crooked people shoplifting, often as roving mobs of thieves). Inflation - a double whammy that hits the stores and their customers.

There is also the demographic collapse. The heaviest consumers are pre-retirement, Generation Jones is retiring or retired now. Retired people spend less on stuff. That leaves Gen X and down in age, and there just aren't as many of them.

Not only does this hit retail, but it also means less tax revenue. That means a lot of fancy infrastructure just won't keep being built and already existing gentrified infrastructure won't be maintained. Towns are going to slide down into "Mayberry." Cities are going back to ghettos with wash strung out on the fire escapes to dry, etc. Retirees, already living longer than before, will become a greater and greater burden. Not just financially for those relying on entitlements, but also competing for a shrinking health care services worker population.
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Dilettante, what an excellent write up!
 
Knight said:
Just the reality that no profit for whatever reason translates to businesses closing.
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Sure, that's a huge part of it.

It just doesn't say anything helpful. At least unless you are proposing some alternative... like government seizure of production, imports, distribution, and retail including all of the infrastructure those require. Giant grey government-run "Costcos" where you get your teeth yanked, hair cut, "medical" treatment, not to mention your weekly ration pack.

Due to its enormous popularity, Soylent Green is in short supply so remember - Tuesday is Soylent Green day.
 
It's the economy. 80% of Americans consider fast food a luxury according to a poll earlier this year. Food prices have skyrocketed the last few years as well as rents in many parts of the country. If fast food is a luxury, then there's a consumer spending issue for a lot more industries.

Add this to the market behavior over the past week and I think your fears of a recession @VintageBetter are well founded. I think we have had localized recession conditions for some time but are moving towards a widespread recession.
 
VintageBetter said:
In my area, the news has told tales of many local discount stores shutting down. They either close down many sites to try to cut costs, or they close all stores and go belly up. One chain, Big Lots, is considering bankruptcy, but they are shuttering some stores first to see if they can survive.

The 99 Cents Only stores already closed. Now I hear news of Buca di Beppo also closing down over 15% of its locations and I always thought they were very popular and doing fine.

A local sushi place, so very popular for years, now has a COUPON in the mail! A COUPON, like it’s a mere pizza joint and not a hot sushi place. This is the first coupon I have ever seen from them in four years.

SO - what’s up!? Are these creeping markers signs of a “correction”, AKA recession ahead?
Click to expand...
Rising operating costs due to shipping and trucking costs and increased taxes, license fees, banking fees, theft, and wages.
Loss of traffic due to a major increase in online shopping.
Exorbitant rents on retail properties.
Crime and public safety concern spikes.
 

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