Waikiki Restaurants Struggle as Visitor Spending Slows and Costs Rise

HONOLULU – Restaurants in Waikiki are reporting one of the slowest seasons they have seen in the last two years. Many are seeing fewer customers and rising operating costs as the holiday travel period approaches, creating uncertainty for an industry that serves as the backbone of Hawaii’s tourism economy.

Mike Palmer, managing partner of the Kuhio Avenue Food Hall, told KITV that business has dropped sharply. “It is the worst I’ve seen in about two years,” he said. Palmer added that visitors appear to be more cautious with their spending, saying, “People are a little more cautious. They want to hang onto their money right now.”

According to Palmer, restaurants and hotels are all competing for the same customers. With fewer visitors choosing to dine out, many businesses are feeling the strain. The competition has intensified as establishments try to attract a smaller pool of tourists who are being more selective about where they spend their vacation dollars.

Federal Shutdown Made Things Worse

Recent flight issues connected to the federal government shutdown added more pressure to an already difficult situation. Sheryl Matsuoka, president and CEO of the Hawaii Restaurant Association, said the flight cancellations and capacity reductions discouraged many travelers from coming to Hawaii.

The shutdown led to staffing shortages at air traffic control towers, forcing airlines to reduce flight schedules to Hawaii. This happened during what should have been a busy travel period, leaving restaurants with even fewer customers than expected.

Matsuoka explained that visitors did not want to deal with canceled flights or long airport lines. “That really hurt our already struggling restaurants,” she said. The timing could not have been worse for businesses that depend on steady tourist traffic to stay profitable.

Sales Down as Much as 20 Percent

Some restaurants are reporting sales declines of up to twenty percent compared to last year. Owners say lower sales affect far more than just the dining rooms. The impact ripples through Hawaii’s entire food supply chain.

When a restaurant closes or cuts back operations, farmers lose buyers for their locally grown produce. Suppliers lose clients who purchase everything from fresh fish to cleaning supplies. Workers lose jobs or see their hours reduced, affecting families across the island.

The restaurant industry in Hawaii employs thousands of people, from servers and cooks to dishwashers and managers. Many of these workers depend on tips and steady shifts to make ends meet in one of the most expensive states in the nation.

Rising Costs Add to the Challenge

Restaurants are also facing higher costs for ingredients, utilities, and labor. Palmer noted that the statewide minimum wage will increase to fourteen dollars per hour on January 1, which is another expense many owners are worried about.

Hawaii already has some of the highest operating costs in the country. Ingredients often need to be shipped from the mainland, adding freight costs to every order. Rent in Waikiki is among the highest in the state. Utilities cost more on an island that depends on imported fuel for much of its electricity.

“There is a lot of pressure on every front,” Palmer said. “The rising costs are difficult when sales are already low.”

Restaurant owners are caught in a difficult position. They cannot easily raise prices without driving away price-conscious tourists. But they also cannot absorb rising costs indefinitely without going out of business.

Hope for a Stronger December

December is usually one of the busiest months for Waikiki restaurants. Many owners are hoping for a rebound as holiday travel increases and families arrive for winter vacations.

Historically, the period between Christmas and New Year brings strong visitor numbers to Hawaii. Travelers escape cold weather on the mainland and celebrate the holidays in a tropical setting. Restaurants typically see packed dining rooms and long wait times during this peak season.

Matsuoka said the restaurant industry is encouraging local residents to support their favorite spots to help keep them open. Local support can make a significant difference for restaurants struggling to survive slower tourist periods.

What Visitors Should Expect

Travelers heading to Oahu in the coming weeks may notice a few changes as restaurants adapt to current conditions:

• Some restaurants may have shorter hours or limited menus as they adjust staffing levels to match customer demand.

• Prices may be higher due to rising operating costs, including the upcoming minimum wage increase and elevated food costs.

• Reservations may be helpful, especially for dinner at popular restaurants that are managing reduced capacity.

• Smaller local restaurants may offer better value and shorter waits compared to larger tourist-focused establishments.

Despite these challenges, Waikiki still offers hundreds of dining options ranging from casual plate lunch spots to upscale oceanfront restaurants. Visitors can still find excellent food and service throughout the area.

Looking Ahead

Both owners and industry leaders remain hopeful that conditions will improve as winter travel picks up. The restaurant industry has weathered difficult periods before, including the pandemic shutdown and subsequent recovery.

However, the current combination of reduced visitor spending, flight disruptions, and rising costs presents a unique challenge. How restaurants adapt in the coming months will shape Waikiki’s dining scene for years to come.

For now, restaurant owners are focused on making it through the slow season and hoping that December brings the customers they need to stay in business.