First, the COVID-19 pandemic shut many restaurants down.
Then came persistent supply shortages after kitchens reopened.
Fast forward to 2026, and mix in minimum-wage hikes, escalating rents and soaring food costs, spurred by tariffs and inflation.
It all adds up to this: Restaurateurs are battling their toughest survival challenge since the Great Depression.
San Diego’s unusually high spate of restaurant closures in the past eight months includes Seventh House, Flap Your Jacks and URBN Wood Fired Pizza in North Park; Breakfast Republic and Chocolat in Hillcrest; Barrio Star in Bankers Hill; King & Queen Cantina in Little Italy; Bottle Rocket Bar & Grill in the East Village; Harley Gray in Mission Hills, and more.
The promising vegan diner in University Heights called Dreamboat, along with its seductive back cocktail lounge named Vulture, are among the most recent casualties.
The dual venture opened less than a year ago as a collaboration between Kory Stetina, who owns Kindred in South Park, and CH Projects, which operates multiple themed hotspots throughout San Diego.
Stetina referred us to his Instagram post when asked why the operation closed on Feb. 8. In the post, he cited “high opening and operating costs combined with the economic realities of today” which made going on “unsustainable.” He also alluded to challenges that went into “the design and build-out in an old building.”
The situation has left many diners wondering if their next meal at their favorite eateries will be their last there.
City and state regulations
City and state regulations indeed add to the woes of San Diego restaurant owners, especially those with ambitious design plans.
Hillcrest Business Association executive director Ben Nicholls calls some of today’s rules “barriers to innovation,” referring in part to the recent closure of Barrel & Board in the heart of Hillcrest.
“They had a speakeasy in the back. The owner tried to do something creative with the space and bring in piano entertainment. But she couldn’t get a stable entertainment license because the city said there are already other businesses with entertainment licenses in that area,” Nicholls said.
The city also now charges up to $30 per square foot for “streetaries,” those outdoor spaces annexed to restaurants that popped up everywhere during the pandemic for little to no cost.
“Many of them are gone because the price now is more than what some restaurateurs pay for their indoor spaces. It’s completely regressive,” he added.
High rent is the suspected reason why Flap Your Jacks, the popular breakfast spot in North Park, suddenly closed. (Photo by Frank Sabatini Jr.)According to Sarah Mattinson, San Diego chapter president of the California Restaurant Association, long inspections before opening a restaurant combined with subsequent reviews by cities and health departments, are tough on new startups and those operating in the red.
“Somebody once said that we are more regulated than a nuclear power plant,” she quipped.
Tariffs imposed by the Trump administration over the past year also have put a strain on restaurant owners, most of whom are running profit margins between 3% and 5% versus 8% to 10% prior to COVID, according to Mattinson.
“The tariffs affect food costs as well as kitchen equipment, furniture and to-go packaging,” she added, while pointing out that a reduction in local tourism is also negatively affecting restaurants, particularly in the Gaslamp Quarter and East Village.
Those areas in the last 10 months have lost nearly a dozen restaurants, such as the upscale Kaluu Mexican Restaurant, Copa Vida coffee cafe and Henry’s Pub.
Customers pull back
Overall, people are dining out less. Combined with rising labor and utility costs, many restaurants are in crisis mode, said the California Restaurant Association’s chief executive officer Jot Condie, who is based in Sacramento.
“Seventy-two percent of restaurants in San Diego County reported that their customer traffic was down in 2024 and 2025 compared to previous years,” he said. “Based on a November 2025 survey, of the 11,594 restaurants within San Diego County, seven percent said they are closing an additional day of the week.”
Condie said pinning down exactly how many restaurants have locked their doors for good is difficult because some close, then reopen or relocate. “Yet based on our observation over the last year, more restaurants are closing rather than opening,” he added.
Barrio Star in Bankers Hill shuttered late last year. (Photo by Frank Sabatini Jr.)As a result, Condie urges restaurant owners to “get off the sidelines and onto the field of public policy to make your voices heard to both state and local policymakers.”
Finally, when it comes to leasing and exorbitant rents, Nicholls weighed in with advice for newcomers: “Property owners look at the foot traffic and car counts in neighborhoods — and they modify their rents accordingly. The counts in Hillcrest, for example, are higher than in South Park, where the rents are more reasonable.”
He said that the prime storefront where Chocolat resided, at Fifth and University near the Hillcrest sign, is undoubtedly high-rent. “But the upcoming tenant (Mr. Charlie’s, due to open soon), wants that foot traffic and is prepared to pay for it.”
One of the core activities of the California Restaurant Association, he added, is going to battle against oppressive regulations while trying to rein in labor costs, sales taxes and “nuisance lawsuits.”
In the case of Barrio Star in Bankers Hill, which closed in October after 17 years in business, chef and co-founder Isabel Cruz concurs. “The costs of goods and labor keep skyrocketing.” she said. “And we get sued all the time for stupid reasons. There are no breaks anywhere for restaurateurs.”
Cruz, who left the business to her co-founded before he closed the restaurant, remains uncertain whether she will open another restaurant in the future.
“I have the itch to have another restaurant, but when I think about it, I get PTSD,” she said.
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