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Happy Gillis Cafe & Hangout closed in Columbus Park this year. A new restaurant is planned to open in the space in 2026 (Thomas White\/The Beacon).<\/p>\n
The economy has developed a split personality.<\/p>\n
Stock prices are near record levels. Some tech companies, particularly in the AI space, are being valued at staggering numbers<\/a>, fueling a rush to develop data centers<\/a>.<\/p>\n Meanwhile, half of workers<\/a> are struggling to get by and lines for food assistance<\/a> block traffic.<\/p>\n The mixed signals can get confusing. But if you really want to know what\u2019s going on, here\u2019s a tip \u2014 ask a bartender.<\/p>\n Restaurant and hospitality workers have a front-row view of our current mixed or \u201cK-shaped\u201d economy<\/a> \u2014 where the top is booming while the rest are scrimping.<\/p>\n \u201cPeople are spending their money either carelessly or more carefully,\u201d longtime bartender Perla Jacobo told The Beacon. \u201cIt\u2019s honestly one of the two. They\u2019re either endlessly consuming or being really intentional about how much they\u2019re spending.\u201d<\/p>\n Clocking in at almost 100,000 workers, the restaurant industry is the third-largest<\/a> occupational group in the Kansas City area. These workers see who has discretionary money to spend and how many people are walking through the door. Since the industry is also notoriously fickle, they feel economic shifts before almost anyone else.<\/p>\n \u201cI think we are a good bellwether,\u201d Mike Burris, executive director of the Greater Kansas City Restaurant Association<\/a>, said about restaurants in the broader economy.<\/p>\n For example, restaurant workers felt the economic effects of the COVID pandemic first and the industry is still dealing with a lagging local recovery, which mirrors broader regional trends. While everyone is dealing with higher food prices, your favorite brunch spot knew about that run on eggs before everyone except the chickens. Likewise, rising rents rank among the most common reasons restaurants close.<\/p>\n With that in mind, it sets off alarm bells as we see several area restaurants and bars close this year, especially ahead of the always-busy holiday season and a promised boom from the World Cup<\/a>. But the answer to why that\u2019s happening \u2014 just like the economy at large \u2014 is complicated.<\/p>\n <\/strong><\/p>\n \t<\/p>\n Recent closures read like a who\u2019s who in the Kansas City hospitality scene.<\/p>\n Each of these restaurants and bars closed or filed bankruptcy this year for its own unique combination of reasons. Some stated explanations for closing include lease disputes, rising costs, personal decisions, lower alcohol sales and dwindling foot traffic.<\/p>\n \u201cThere have been a few of them here (closed restaurants) that I\u2019ve been surprised about,\u201d Burris said. \u201cAbout a third of most restaurants\u2019 income is in the last two months of the year\u2026 If they feel like they aren\u2019t seeing or going to see those sales increases, then there\u2019s no reason for them to stay open longer.\u201d<\/p>\n Burris says that there is a natural churn in openings and closings, and that despite the closings he sees the area\u2019s restaurant industry as generally healthy.<\/p>\n The National Restaurant Association \u2014 which is made up of groups like Burris\u2019 Greater Kansas City Restaurant Association \u2014 published a survey in late November showing that 48% of restaurant operators reported higher same-store sales in October than a year earlier.<\/p>\n But what complicates things is that the same survey<\/a> reported that 35% said sales were down and 48% reported lower customer traffic in October when compared to last year. A plurality of operators have reported reduced same-store foot traffic nearly every month this year.<\/p>\n Generally, sales are up or the same but fewer people are going into restaurants. That\u2019s a street-level indicator of the K-shaped economy at work.<\/p>\n <\/strong><\/p>\n \t<\/p>\n Jacob Brewer is the general manager of Noka<\/a>, a Japanese restaurant in Martini Corner. He says business has been great. Noka\u2019s checks typically average $50-$100 a person, according to reviews, and Brewer said they routinely fill and turn the 88-seat restaurant.<\/p>\n He sees signs of distress in the larger economy \u2014 ticking off tariffs, rising food costs and overall inflation \u2014 even as Noka\u2019s sales are significantly up year over year. This confuses him.<\/p>\n \u201cI see videos of people waiting in food lines and then I see a full restaurant going on a wait every single weekend,\u201d Brewer said. \u201cIt\u2019s such a weird dynamic because I keep thinking people are going to stop eating out because they can\u2019t afford it, but I\u2019m just not seeing it here.\u201d<\/p>\n Brewer isn\u2019t wrong to be confounded. The economic data supports both realities existing simultaneously. Economists have dubbed it the \u201cK-shaped\u201d economy.<\/p>\n The term was popularized by William & Mary economics professor Peter Atwater. He told the Associated Press<\/a> this month that inflation has hurt households that make less than $100,000 while asset inflation has helped those with wealth.<\/p>\n The result is a \u201cK\u201d where there are gains at the top, decline for the bottom and a shrinking middle. In recent years and especially since the COVID pandemic, the top income earners have largely driven economic gains while the bottom two-thirds have struggled with rising costs.<\/p>\n \u201cFor the last five to seven years, the economy has been driven almost entirely by people in the upper third of income earners,\u201d Chris Kuehl, an economist who co-founded Armada Corporate Intelligence, told The Beacon in August.<\/p>\n This trend shows up in your favorite restaurant.<\/p>\n A September report<\/a> from the National Restaurant Association said that nearly $6 out of every $10 spent in restaurants come from households that make more than $100,000, based on 2023 data. Meanwhile 44% of lower-income Americans making roughly less than $50,000 a year say they are eating out less this year compared to 2024, according to a YouGov survey<\/a>.<\/p>\n Jacobo confirmed seeing a lower volume of overall restaurant and bar guests in recent years. In the spaces where she\u2019s worked since the COVID pandemic, she\u2019s seeing a mix of higher-end clientele and people out for a special occasion but fewer blue-collar regulars.<\/p>\n The Beacon spoke to several front-line restaurant workers who weren\u2019t comfortable speaking publicly for fear of losing their jobs or hurting the reputation of the establishment where they work. One bartender in Lee\u2019s Summit shared that foot traffic was down 25% and that take-home pay is also down as a result.<\/p>\n \u201cThere\u2019s definitely a tale of two cities going on here,\u201d he said. \u201cThe wealthy are still coming out spending big. I see them more than the average Joe coming in after a hard day of work.\u201d<\/p>\n <\/strong><\/p>\n \t<\/p>\n Forbes Cross spent nearly 50 years in the Kansas City restaurant business, owning 14 establishments before retiring and closing Brookside\u2019s Michael Forbes Grille in 2024. He\u2019s seen trends come and go.<\/p>\n He said this feels different.<\/p>\n The Federal Reserve Bank of Kansas City\u2019s Beige Book<\/a> said that consumer spending is weakening as foot traffic and leisure activities have slowed. The local Fed cites a softening labor market paired with the recent government shutdown among the reasons.<\/p>\n \u201cThe markets just shrank,\u201d Cross said about the restaurant industry after COVID. \u201cThat upper-middle class on down \u2014 I think they\u2019re staying home more.\u201d<\/p>\n He described a calculus that\u2019s become familiar to anyone watching their bank account. A nice dinner out with a bottle of wine can easily run $150 to $200. The same meal at home costs roughly $50 to $75.<\/p>\n Fewer people in the door means fewer workers are needed.<\/p>\n Frank Lenk, the Mid-America Regional Council\u2019s director of economic research, said the Kansas City area is in a \u201cjobcession<\/a>,\u201d meaning growth hasn\u2019t stopped entirely, but it\u2019s low enough that unemployment keeps ticking upward.<\/p>\n The restaurant industry locally has only recovered to 85.9% of its pre-pandemic level, according to Lenk\u2019s local economic outlook<\/a>. Lenk also projected accommodation and food services \u2014 the sector that includes restaurants \u2014 to be down 1,541 jobs in 2025.<\/p>\n \u201cIt\u2019s just economics,\u201d Cross said. \u201cPeople just can\u2019t afford to eat out as much as they used to.\u201d<\/p>\n Public opinion backs him up.<\/p>\n A 2024 survey from Vericast<\/a> found that 68% of consumers are \u201ctrading down\u201d from restaurant meals to cooking at home. A 2025 YouGov survey<\/a> said that two-thirds of diners who dine out less frequently cite increasing prices as the reason.<\/p>\n Burris is quick to point out higher food prices \u2014 up 29% overall<\/a> since 2020 \u2014 rose across the board, so it\u2019s more expensive both at restaurants and grocery stores. But most restaurants use a pricing strategy where food costs are targeted to be 30% of the listed menu price for customers. This is to account for the other two large costs for restaurant operators: labor and fixed overhead.<\/p>\n <\/strong><\/p>\n \t<\/p>\n Cross said that when restaurants see higher costs, they have to raise prices or risk eroding already thin profit margins. He said the average restaurant works with a 5% profit margin and even the strongest restaurants rarely exceed 15%.<\/p>\n From 2020 onward Cross watched his food costs climb from the low 30% target past 40%. Beef prices have risen nearly 15% in just the past year, with ground beef topping $6 per pound<\/a> for the first time in history. And unlike grocers, restaurants can\u2019t just update their prices with a click.<\/p>\n \u201cYou\u2019ve got to be sensitive about raising prices,\u201d Cross said. \u201cWe did it in smaller increments. Maybe raise the menu prices around a dollar, then next year another dollar. But we probably should have been raising them two and three dollars, because the costs kept going up. You kept hoping the costs would come down. They didn\u2019t.\u201d<\/p>\n Customers notice. YouGov<\/a> found that 82% of Americans think that restaurants have raised their prices this year and only 28% think those prices are fair.<\/p>\n Brewer said that tariffs have impacted speciality product prices and availability.<\/p>\n \u201cThere\u2019s been a drastic difference,\u201d Brewer said. \u201cThere are certain wines that we flat out aren\u2019t able to get anymore. The French and Italians aren\u2019t exporting wine like they used to because they don\u2019t want to absorb that cost and neither do the distributors here in America. Tariffs are the worst economic idea of all time.\u201d<\/p>\n Many of the restaurants that closed in the past year cited a lease disagreement as the reason for their closure. According to Redfin<\/a>, the median sale price for a home is up roughly 32% over the last five years in Kansas City. As real estate prices rise, landlords will ask restaurants for more money.<\/p>\n Cross said rent is the one cost restaurant owners can\u2019t easily adjust.<\/p>\n \u201cThe rent is fixed. You can\u2019t change it unless you can renegotiate with the landlord,\u201d he said. \u201cLabor, you can cut hours. Food, you can adjust your menu. But the rent \u2014 nine times out of ten, they\u2019re not going to lower it.\u201d<\/p>\n For many operators, getting a rent increase means it\u2019s time to close up shop.<\/p>\n \u201cThe rent going up is maybe the last straw,\u201d Burris said. \u201cBecause everything\u2019s gone up and it\u2019s tougher to compete.\u201d<\/p>\n <\/strong><\/p>\n \t<\/p>\n Restaurants have always been a volatile business. The failure rate is brutal even in good times. But the current moment tells us how this economy is going for working people.<\/p>\n \u201cThe first thing people cut is entertainment,\u201d Cross said. \u201cObviously, the economy is going to tell us a lot.\u201d<\/p>\n The same forces squeezing restaurants \u2014 rising food costs, elevated rents, tariffs \u2014 are squeezing households across the region. The same K-shaped recovery that fills some dining rooms with people living at the top of the K clears out food bank shelves with people living at the bottom of the K.<\/p>\n Steady restaurant sales seem to mask that fewer people are dining out since those who can still afford it are spending more.<\/p>\n Some Kansas City restaurants saw the promise of the World Cup coming to town in six months, but couldn\u2019t white-knuckle through the rising costs to make it until then.<\/p>\n Taken together this doesn\u2019t necessarily mean a recession is coming. But to the households making less than $100,000, it sure feels like they are living through one.<\/p>\n \u201cIn about six months we can revisit this conversation, and we\u2019ll see,\u201d said Brewer.<\/p>\n This article<\/a> first appeared on Beacon: Kansas City<\/a> and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License<\/a>. Happy Gillis Cafe & Hangout closed in Columbus Park this year. A new restaurant is planned to open in the space in 2026 (Thomas White\/The Beacon). The economy has developed a split personality. Stock prices are near record levels. Some tech companies, particularly in the AI space, are being valued at staggering numbers, fueling a…<\/p>\n","protected":false},"author":2,"featured_media":8369,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8368","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"yoast_head":"\nThe closures<\/h4>\n
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What is a K-shaped economy?<\/h4>\n
![\"Jacob](\"https:\/\/thebeaconnews.org\/wp-content\/uploads\/2025\/12\/8a4ad476-a5f7-4b38-8a7b-32ee1095670e-1024x784.jpg\")
\u2018Shrinking market\u2019<\/h4>\n
\n![\"\"](\"https:\/\/thebeaconnews.org\/wp-content\/uploads\/2025\/12\/Your-paragraph-text-2-1024x683.png\")
\nRestaurant challenges mirror broader challenges<\/h4>\n
![\"Road](\"https:\/\/thebeaconnews.org\/wp-content\/uploads\/2025\/12\/Bar-K-Road-Closed-1024x512.jpg\")
Uncertainty ahead<\/h4>\n
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