Michael Giacomini, vice president of Red Cow and Red Rabbit, said the drop-off in foot traffic happened quicky and dramatically over the summer.

“Sometimes when you see a drop in sales you can feel it,” Giacomini said. “This one really felt like a losing battle.”

Giacomini isn’t alone, and his experience isn’t unique to the Twin Cities. A recent survey conducted by the Federal Reserve Bank of Minneapolis indicated that summer revenue was down year over year for the hospitality and tourism sectors around the state.

“Businesses in the Twin Cities and the state’s northeast region were especially hard hit, with a larger share of survey respondents reporting worsening traffic and revenue,” according to the Fed’s report. “Among business sectors, food and drink establishments were hardest hit. … Compared with the past three summers, more and more hospitality and tourism businesses have reported decreasing demand for their services”

What was the main culprit? Survey respondents offered a host of reasons, including the effects of rain and flooding throughout the state. Perhaps unsurprisingly, many  respondents also pointed to inflation.

Local businesses interviewed by TCB also said that road construction was another revenue killer. Giacomini said three of his company’s restaurants were impacted by road construction. Anne Knipe, CEO of Long Table Hospitality and The Lynhall, shared a similar experience.

“I would like to say how devastating road construction was for our Edina location. It was next to impossible, without walking into the area, to access our building at 50th and France,” Knipe said. “Our reservation cancellations were up as high as 50% at the height of the summer.”

According to the Fed’s report, several restaurant owners and staff in the Twin Cities said the fear of crime is another major factor keeping customers from coming downtown.

“Guest count has been down in Minneapolis in general, and that had to do with not just the pandemic” and the unrest in the wake of George Floyd’s murder, said Brent Frederick, co-founder of Jester Concepts. “That takes people out of the downtown district and keep them in their suburban homes and neighborhoods.”

Knipe said she places some blame on the Minneapolis City Council because she believes they are sabotaging the efforts of small businesses by “refusing to fund law enforcement, threatening ride share companies, pushing for more bike lanes and refusing to address the No. 1 concern of business owners and residents, which is public safety.”

Knipe also expressed concern with the city’s proposed Labor Standards Board, which has been cause for concern among several restaurateurs around the metro.

Meanwhile, 60% of survey respondents identified the rising costs of goods and services used by their business as a top challenge, according to the Fed’s survey results.

Frederick said his business’s revenue has remained consistent the past five years, but that it’s the result of having to raise prices to match inflation rates. The Fed stated in its report that inflation has increased by 21% since summer 2020.

Knipe expressed similar sentiments, noting that “customers are already pushing back on menu prices and will not stomach another price increase. They just won’t go out.”

To combat this, businesses are getting creative on how they can draw more consumers in. Frederick said his business has taken to social media, posting videos on TikTok of his chefs making steaks and grilling out.

“Social media has really helped us out,” Frederick said.

Red Cow and Red Rabbit also worked on creating their own events by partnering with other local businesses. For example, they partnered with a local yoga studio where people could get a free beer after the event.

“We want to still be in the conversation when people choose where to go and eat, and the best way to do that is through a great experience,” Giacomini said. “We trying to stay relevant when people make their choices.”

The Fed’s survey stated that the outlook is mixed for the next six months, saying a third of respondents were pessimistic, a third were neutral, and a third were optimistic.

Fall and winter tend to bring more business, both Frederick and Giacomini said. It is a time where their businesses can focus more on hosting holiday-themed events, like the 12 cocktails of Christmas at Red Rabbit, and serving holiday-themed menu items.

Frederick, Knipe, and Giacomini said they are optimistic about the future of their businesses but expressed worries about what’s to come.

“Small businesses are at a tipping point, and sadly the elected officials don’t seem to comprehend how dire the situation truly is,” Knipe said.