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Business has recovered to pre-pandemic levels for many companies in Maine and tourism is expected to surge this summer, but higher costs and worker shortages are making it harder for small businesses to pay rent.
Some 40 percent of small businesses surveyed in Maine did not pay rent in full or on time in May, up 15 percentage points from April and higher than the national average of 35 percent, according to a study released Wednesday by Alignable, a Massachusetts-based online referral network for small business owners. The national average was 37 percent last May and 34 percent in 2020.
Last May showed a worrisome trend because rent delinquencies rose for the first time this year, Alignable said. Small businesses dominate Maine’s employment landscape, accounting for more than 99 percent of all businesses in the state and more than half of the workforce, according to the U.S. Small Business Administration.
“Hopefully this is a one-off blip,” David Clough, Maine director for the National Federation of Independent Business, an association of small business owners. “Otherwise, it portends a disturbing trend.”
About half of the 5,300 small businesses that Alignable polled nationally — with 211 of them in Maine — also said rent has risen in the past six months. That’s up 6 percent from April. Similar increases occurred in Maine.
Maine has no comparable data for rent delinquencies, rent hikes or the number of companies that closed or cut hours because of the COVID-19 pandemic. But there is plenty of anecdotal information about the financial and workforce pressures they face.
The study numbers seem high, Dana Connors, president of the Maine State Chamber of Commerce, said. He has not heard about problems paying rent from member companies.
One of the hardest-hit sectors during the pandemic, restaurants, appear to be recovering, according to state tax revenue data. Restaurant tax revenues topped $227 million in March 2022, up 60 percent compared with March 2020, the first month of the pandemic here.
Those numbers don’t tell the whole story, said Gerard Kiladjian, president of Principal Hospitality, who owns The Federal hotel in Brunswick and the 555 North restaurant in it along with other investors.
It took a while to staff both of the startup businesses, he said. Last year’s projections that they would be self-sustaining within two months of opening this spring quickly fell by the wayside.
“We need more people eating on a particular day to make the same profit as we would have last year,” said Kiladjian, who was general manager of the Portland Harbor Hotel for the past 14 years.
He said he would need upwards of 130 people to make the same money as he did with 100 customers last year because all his costs are up 15 percent to 20 percent.
David Turin, the owner of David’s Restaurant in Portland and David’s 388 in South Portland, said restaurants are busy, but he also is finding it more difficult to cover expenses. He is able to pay rents on both locations, and is very close to having full hours.
With higher prices in every area of his business and thin profit margins, though, his options are to increase business or charge higher prices, neither of which is easy to do.
“A lot of businesses are already at capacity on their peak days,” he said. “Are we going to have to have a $50 cheeseburger?”
