Why so many Minnesota restaurants are closing
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Illustration: Shoshana Gordon/Axios
The recent wave of restaurant closures is not abnormal during Minnesota winter, but it's revealed an industry facing serious challenges beyond the normal ebbs and flows.
Driving the news: Several restaurants have closed their doors over the last six weeks, including all four Revival locations, St. Paul's Dark Horse, Rosemount's The Clover and Lake Elmo's Machine Shed.
Why it matters: Restaurateurs say rapidly rising labor and food costs are forcing them to shut down or change the way they do business.
What they're saying: Testifying before a Minnesota Senate committee, Finnish Bistro owner Sandra Weise said the profit margins at her St. Paul restaurant and coffee shop are razor thin, which has made running her business difficult.
- "I've loved it, but I'm exhausted," she said before breaking down in tears.
By the numbers: Wages for restaurant workers increased by 30% between 2019 and 2024, according to the Minnesota Department of Employment and Economic Development (DEED). Food prices have increased by 29% during that time, according to the U.S. Bureau of Labor Statistics.
- "The costs jumped so high in such a short period of time that the value proposition for our customers isn't there," Revival chef Thomas Boemer told WCCO TV.
- "It's not sustainable," Hospitality Minnesota CEO Angie Whitcomb tells Axios. "We have to, as a state, do something to support our restaurants."
Between the lines: Despite all these closings, the Minnesota restaurant scene has more than rebounded since the pandemic. There were 7.9% more restaurants in the summer of 2024 than the summer of 2019, according to DEED.
- Despite the increase, there are 1.8% fewer people working in the industry statewide than in 2019.
- Minnesota's restaurant recovery hasn't been quite as robust as the national rebound — there were 10.5% more restaurants in the U.S. in 2024 than in 2019, according to BLS stats.
Zoom in: Several restaurateurs pointed out that Minnesota is one of only seven states without a tip credit and does not allow mandated tip pooling, which is when servers have to share their gratuities with other employees. Plus, Minnesota is now the only state that doesn't allow service fees at restaurants.
- Those factors contribute to a pay imbalance between the front and back of house, Soleil Ramirez, owner of Crasqui Restaurant in St. Paul, said during the committee hearing.
- "A server works four hours a day and they make $80,000, $90,000 a year, and a cook who works eight hours a day makes $40,000 a year," she said.
What we're watching: How restaurants deal with these problems.
- Many have raised menu prices, others have opted for less labor-intensive models like counter service and QR ordering and some are just getting by with fewer staff.