Nearly Half of All Restaurants & Car Services Couldn't Pay July Rent

TREND TRACKER | DATA INSIGHTS | JULY RENT POLL: Boston, MA, July 29, 2022: Nearly half of the small business owners in the transportation and restaurant sectors say that they were unable to pay their July rent in full and on time.  That's according to Alignable's July Rent Report, based on responses from 3,553 randomly selected small business owners surveyed from 6/25/22 to 7/29/22.

Specifically, 48% of trucking companies, taxi & limo services, and independent Uber & Lyft drivers couldn't cover July rent, in addition to 45% of restaurant owners, 44% of nonprofits, and 44% of retailers. 

Many of those surveyed pointed to skyrocketing inflation, including escalating rents, gas prices, supplies, and transportation/shipping costs as reasons that they couldn't handle their full rent in July.

Based on this survey, 46% reported that they're paying more for rent now than they did six months ago, and another 4% say their landlords plan to increase their rent soon. 

Digging deeper into the different sectors, the damaging effects of high gas prices is very apparent looking at this industry-specific rent delinquency chart. 

First off, transportation is the industry with the highest rent delinquency rate this month, with 48% of those business owners saying they couldn't afford it.

Some noted that it has been difficult to get some clients to pay more to cover the enormous increase in gas prices. And some of their clients' businesses have folded due to inflation, so that means less income for the truckers, car services, and others in transportation.

However, those in transportation are having a better month than they had in June. But let's see if that's just a blip or if rent becomes less burdensome for those in this industry as the summer proceeds.  Small businesses are resilient and they often find ways around problems others would deem insurmountable.

Restaurants & Retailers On The Ropes With Rent Again

Restaurants and retailers -- two sectors that really struggled during COVID and now have major issues with inflation -- aren't far behind their peers in transportation.

Up 7% from June, now 45% of restaurant owners say they couldn't pay their full rent this month.

And retailers saw an even steeper jump, up 9% from June to July, where 44% of them didn't have enough cash on hand to cover their rent.

In both cases, these rates of delinquency represent all-time highs for 2022.

Beauty Salons & Real Estate Agents Struggle More In July

Right behind them, you have Beauty Salons, 40% of which were delinquent in July, up 15% from June. And, they, too, face higher shipping and product costs for everything they buy to perform their services, not to mention the retail products they sell to clients.  

One other sector I wanted to point out here that's on the rise in terms of rent delinquency is the Real Estate industry.

One-third (33%) of real estate agents in our poll were unable to pay their July rent.  That's a new high for this category and it's up 8% from June.

Many real estate agents have expressed great concern over rising interest rates, because those could get in the way of house sales.

And there are already inventory issues in many markets, too.  So, we will need to watch this category very closely over the next few months.

49% Of Minority-Owned Businesses Couldn't Afford Rent

Looking at the rent situation among small business owners across several demographics, we found that 49% of minority-owned businesses unfortunately couldn't afford their July rent. 

Throughout the pandemic period, minority-owned businesses we polled received less federal assistance and fewer loans from private lenders than nonminority-owned businesses, so unfortunately this disparity is continuing into what many are calling a post-pandemic phase. 

More than one-third of women-owned businesses (35%) couldn't pay July rent, along with 33% nonminority-owned firms, and 26% of small businesses owned by veterans.

MA, NY, IL & MI Top The List of Most Delinquent States

The Top Four states with the highest rent delinquency rates about small businesses are:

• Massachusetts at 42%
• New York at 41%
• Illinois at 40% and
  
• Michigan at 37%.

At 34%, Pennsylvania's rent delinquency rate matches the current U.S> average.

Others that are close to that number are:

• Arizona (31%)
• Ohio (31%) and
• Georgia (30%).

At the lower end of the spectrum, you have Texas at 29%, California, Colorado and Florida at 28%, and finally New Jersey at 27%. In most cases, these July rates were much lower than June's rate.

We'll need to see if this turns into a trend indicating a faster recovery in those states, or if it's just some statistical variance between months. But for now, it's refreshing to see, especially as the national average remains so high.

As far as Canada goes, 37% of small businesses there couldn't pay July's rent compared to 34% in the U.S.

And the rates were even higher in Alberta and British Columbia, and just a bit lower in Ontario.

• Alberta: 43%
• British Columbia: 40%
• Ontario: 36%

To see other specific poll data related to industries, states or provinces, please contact me at chuck@alignable.com. To review past poll results, go to the Alignable Research Center. 

About The Alignable Research Center

Alignable is the largest online referral network for small businesses with 7 million+ members across North America. 

We established our research center in early March 2020, to track and report the impact of the Coronavirus on small businesses, and to monitor recovery efforts, informing the media, policymakers, and our members.