Last year, more than 100 restaurants in the Los Angeles area shut down. With ingredient costs and rent skyrocketing, coupled with rising labor and maintenance expenses, running a restaurant has become nearly impossible. Meanwhile, many customers have cut back on dining out due to persistently high prices since the COVID-19 pandemic, leading to poor sales.

According to the LA Times on the 11th, over 100 restaurants in LA closed last year. While about 65 restaurants closed in 2023, the number increased by 54% to over 100 last year.

The LA Times reported that many restaurants that had been popular and trendsetting in LA over the past decade have closed one after another.

The list of closures includes restaurants that had captivated the taste buds of the Korean community. The Red Room, one of LA's most upscale wine bars, which offered modern Korean fusion cuisine, closed its doors in August last year, just seven months after opening. Tokki, located at 6th & Chapman Plaza, also ended its two-year run. A Korean-style "kisa" restaurant, which opened in Koreatown riding the wave of the New York trend, shut down after just six months in September last year. Yong Gung, a Koreatown icon for over 40 years, closed its doors earlier this year. Hong Yeon, which previously operated at the Rotex Plaza Hotel, has now moved into the former Yong Gung location and is currently in business.

The LA Times and Koreatown restaurant owners cite the ongoing economic downturn and inflation as the main reasons for the increase in closures. Although the U.S. economy appears to be achieving a soft landing statistically, Koreatown's economy remains sluggish. Rising labor costs, rent, ingredient prices, and repair expenses have made it difficult to maintain profit margins. According to the U.S. Department of Agriculture, food prices surged by 25% from 2019 to 2023. Additionally, the lingering effects of the Hollywood entertainment industry strikes in 2023 are still being felt.

Mr. Kim, who operates a restaurant in Koreatown, said, "Government support programs like the Paycheck Protection Program loans and the Restaurant Revitalization Fund during the COVID-19 pandemic ended long ago. With the minimum wage for servers now at $16.50, it's impossible to break even." Another restaurant owner, Mr. Choi, added, "We're struggling to keep labor costs below 30%, but they're already close to 40%."

The steep rise in tipping is also cited as a factor discouraging customers from dining out. A Korean-American, Mr. Kim, said, "Service hasn't improved from the 10% tipping days, and all they do is ask if you need anything else. But now, you're expected to tip at least 18%. It's stressful to press the tip button in front of the staff, so I prefer food courts where tipping isn't expected."

Security issues, including homelessness, are also contributing to restaurant closures. Last June, the popular taco restaurant "Gogo's Tacos" near Koreatown closed its doors. The restaurant's representative stated on Instagram, "As safety concerns in the community have become more prominent, we can no longer guarantee the safety of our employees. After three years of operation, we are closing the restaurant." Homelessness has become a significant obstacle to running a business.

The biggest problem is that this year's situation is unlikely to improve compared to last year. There are no viable solutions to mitigate the inflationary pressures of labor, ingredient, and rent costs. A food industry insider said, "To open a restaurant, you need to take out a business loan and invest heavily in remodeling and expansion. You have to survive for up to two years, but very few restaurants can make it through that 1-2 year 'death valley.'"



<Hongyong Park>