With an impassioned plea, Diego Galicia, executive chef and co-founder of Mixtli, the award-winning Mexican fine dining destination, became the latest local restaurateur to ask for the community’s support.
“It has been a really difficult summer,” he wrote in a Sept. 12 email. He and partner Rico Torres had just announced the closure of Greenhouse, their coffee shop in Olmos Park.
He encouraged diners to visit Mixtli; if they could not, “a gift card would go a long way” — an ask reminiscent of the pandemic-era Hail Mary that gave restaurants a quick cash infusion.
In an interview with the San Antonio Report last week, Galicia said the email helped, bringing a wave of reservations and gift card purchases. But he remains worried about San Antonio’s hospitality industry overall as locally owned restaurants and bars continue to shutter, laying off employees as they go.
A non-exhaustive list of closures just this year includes well-known names like Weathered Souls Brewery, Allora and its sister Arrosta, Botika and Blue Box at Pearl, Acadiana Cafe, Bier Garten River Walk, ChilaKing, Hands Down, Jim’s, Krazy Katsu, Second Pitch Beer Co., Wurst Behavior and many more.
Galicia and other local restaurateurs believe the City of San Antonio could be doing more to ease the pressures they face.
“But when I reach out to City Council, I get ignored,” he said. Given the size of the restaurant industry, “they should be concerned about what’s going on.”
The market forces arrayed against the hospitality sector, which has long been a tough business with thin margins, are legion. Some are universal to the industry, such as higher food and labor costs, a pandemic that changed consumers’ dining habits and economic uncertainty exacerbated by foreign wars and a tense 2024 U.S. presidential election.
Others are unique to San Antonio, like the increasingly brutal summers that keep customers away and drive sky-high utility bills, never-ending construction projects that choke off access to entire neighborhoods and residents with less expendable income than in other big cities.
Galicia named rising commercial rents and state taxes as additional factors putting pressure on locally owned establishments.
Restaurants and other food service businesses employ more than 1.4 million people in Texas — 11% of the state’s total workforce. Food service recently surpassed health care as the state’s No. 1 private employer, driving $106.8 billion in sales in 2023.
San Antonio, named a UNESCO Creative City of Gastronomy in 2017, is home to about 5,660 restaurants, according to the Texas Restaurant Association, more than half of which are independently owned. Hospitality remains a major economic driver here, contributing $19 billion to the local economy in 2022 and employing 140,000 people.
But it’s been another tough summer. The Texas comptroller’s office reported declining restaurant tax revenues statewide in August compared to a year ago, “the first decline for the sector since the pandemic.”
Pondering incentives
San Antonio does have a program that helps small businesses that can show construction-related revenue loss with grants of up to $35,000. This year’s available funding is less than in years past, so the city prioritized corridors that have been under construction the longest.
That includes businesses in Southtown. Chef Elizabeth Johnson just learned that her restaurant Pharm Table, known for its locally sourced, plant-forward menu, qualified for one of those grants.
She said she’s grateful for the help but noted that the need far outstrips the amount of money available. There “needs to be a much more holistic approach,” she said. “What’s the point if after a project is complete, all the local businesses have already shuttered?”
She said the city needs to think creatively. Could it buy meals from local restaurants to feed the workers on all those construction projects? Other ways the city could help ease pressures on the local hospitality industry, owners say, include utility assistance, tax breaks or rebates, easier permitting processes.
The key is providing help that a restaurant can depend on, said John Russ, chef and owner of Clementine in Castle Hills. A one-time handout that allows a struggling restaurant to “float” a little longer is less helpful, he said, than an annual sales tax rebate or a grant that allows a restaurant to add a revenue-generating feature, like outdoor seating or a drive-thru window.
Russ sits on Castle Hills’ Economic Development Committee, which is currently weighing a variety of potential economic incentive ideas, including for restaurants looking to open in Castle Hills or open new locations there.
Castle Hills, one of the cities located inside San Antonio’s borders but has its own government, “has a lot of restaurants already, and we do that well. So how can we lean into that?” Castle Hills Mayor JR Treviño asked.
The committee is looking at replicating some of the programs San Antonio has instituted, such as tax incentive reinvestment zones, job training and façade grants to help business owners with the cost of upgrading or beautifying building exteriors.
Getting political
In San Antonio, frustration over feeling ignored by City Hall led several local restaurant and bar owners to create the Business Community PAC, which aims to mobilize business owners and residents around the upcoming city charter election and next spring’s 2025 municipal elections, which include an open mayoral race.
The PAC is hosting a “kickoff” event on Sept. 26. Elected officials and mayoral hopefuls are invited “to come and listen,” said Chad Carey, owner of the Empty Stomach Group and one of the PAC’s organizers.
Last Tuesday, mayoral candidate Rolando Pablos released an ambitious, 10-point plan to shore up San Antonio’s hospitality industry. It includes tax incentives and grants for staffing, tax incentives for landlords who cap or reduce rents, subsidized child care for workers, grants for tech adoption and more.
“City Hall has to be serious about stabilizing these small economic engines,” Pablos wrote in an email announcing his plan. “Every closure not only shatters an entrepreneur’s dream and disrupts lives, but also deals a blow to the city’s culture and vitality. The toll is enormous—neighborhoods lose gathering places, our local economy weakens, we lose our luster as a city, and the fabric of the community frays with every closing door.”
State Rep. Diego Bernal (D-San Antonio), whose district encompasses many of the San Antonio neighborhoods whose businesses have been impacted by construction projects, said state lawmakers should also be looking at ways to support the industry.
He recently sat down with Galicia to talk about what kind of relief might be developed at the state level that could earn bipartisan support.
The State of Texas “has more than enough money” to help the hospitality industry, Bernal said. “The question is, what is sustainable over the long term, and politically?”
In 2023, the Legislature passed new laws aiming to streamline the industry and reduce costs. “We had great bipartisan support for a lot of different measures,” said Kelsey Erickson Streufert of the Texas Restaurant Association, which hosted its annual restaurant show in San Antonio in July and plans to be back in 2026, 2027 and 2028.
Streufert told the San Antonio Report that while she can’t share specific policy proposals for the next legislative session yet, “our priorities include helping restaurants save money, strengthening our workforce through education initiatives and childcare, and ensuring that restaurants across Texas are more resilient in the face of extreme weather and rising operational costs.”
Hope springs eternal
Despite the recent closures and what it termed a “difficult economy,” the Texas Restaurant Association said that “overall,” the restaurant market is growing in San Antonio.
The business has always been difficult — but it’s also dynamic, with new places opening regularly and local favorites adding locations. Pullman Market at Pearl boasts four new restaurants, while Make Ready Market offers diners a choice of six eateries.
Nor has the difficult environment stopped would-be entrepreneurs from forging ahead with plans for new coffee shops, bars and restaurants. Launch SA, the city’s small business support center, recently hosted a food and beverage mentor panel that drew more than two dozen attendees.
They were eager to hear from industry veterans, including James Beard-nominated chef Sean Wen of the late Wurst Behavior, Curry Boys and Pinch Boil House, who only half-jokingly asked them, “Do you really want to do this?”
Chef Edward Garcia III of Hemisfair’s Box Street All Day, which opened its second location near La Cantera in January, was also in attendance. He echoed Wen’s observation that today’s diners are looking for “an experience” when they go out.
As costs stay high and consumers remain choosier about when and where they open their wallets, “every tiny thing matters,” Garcia said. “The hospitality, the training of staff, all of it matters.”
Bernal said making sure local restaurants, bars, coffee shops and food trucks can be successful in San Antonio must be a priority for the city.
When he sat down to talk with Galicia, Bernal admitted, “I was thinking, ‘Oh my God, please don’t tell me you’re leaving.’ I’m always worried about losing talent.”
