Washington, D.C. Restaurants Feel the Sting of Prolonged Government Shutdown

It’s been over a month since the federal government shutdown began, and for the restaurant world in Washington, D.C., the impact is immediate and increasingly painful. Recent data from BlackBox Intelligence reveals a sharp dip in restaurant traffic and sales, highlighting how the local hospitality industry is getting squeezed more than most.

The situation is grim for the city’s roughly 2,660 restaurants, many still trying to recover from previous disruptions. This time, the shutdown is compounded by ongoing government layoffs and declining consumer sentiment. As Jean Hagan, partner at EisnerAmper, points out, “Less people in the city means less restaurant customers.” Add to that the anxiety of rising prices and worries about jobs, and it’s clear why diners are staying home.

According to BlackBox Intelligence, restaurant traffic in the D.C. market dropped 2.8% in the week of Oct. 12, compared to -1.6% pre-shutdown. Upscale dining took the biggest hit, with traffic down 6.8% and total sales sinking 5.7%. On a brighter note, casual dining saw a slight uptick, with traffic up 1.6% during this timeframe.

Major brands are also noticing the pressure. The Cheesecake Factory expects Q4 revenue to fall by about 1%, reminiscent of the 2019 shutdown effect. Shake Shack, meanwhile, is rethinking its development pipeline, tilting away from D.C. and New York after ongoing macroeconomic headwinds.

As the shutdown drags on, analysts predict a conservative outlook for the rest of the year, especially for chains like CAVA and Sweetgreen that have a sizable presence in the D.C. area.

How Are Operators Coping?

Industry experts recommend that restaurants analyze their sales and profitability by daypart—and cut any zones that lose money during the shutdown. Loyalty programs are also getting attention, with consultants urging operators to launch or enhance these efforts to entice reluctant customers. Some restaurants have invited furloughed workers in for discounted meals. Taking care of regular customers can enhance brand loyalty when the shutdown is over.

The road ahead is uncertain, but one thing is clear: as long as the government shutdown continues, D.C.’s restaurants will be fighting an uphill battle to keep seats filled and lights on. It’s not much better in Northern Virginia or the Maryland suburbs.