AUSTIN (KXAN) — In 1975, Skeeter Miller worked as the first dishwasher in the back of Austin’s only County Line restaurant.
Fifty years and five additional locations later, Miller, now president and owner of The County Line Inc., has experienced the restaurant industry’s growth first-hand.
“When [The County Line] first opened, there was only about 800 restaurants in the city of Austin. Today, there’s 8,000,” Miller said.
Although Austin is no longer the fastest-growing metro in the U.S., its population is now more than 2.5 million, up 2.3% in the past year, according to U.S. Census Bureau estimates. This growth fuels the restaurant industry, which generates around $4.1 billion annually, according to the City of Austin.
Scholz Garten, the oldest operating business in Texas and the longest-running biergarten in the U.S., knows this growth well.
“There’s a lot of change that’s going on in the community, the growth in the community,” Dan Smith, owner and operating partner of Scholz Garten, said. “There’s been a lot of new great restaurant concepts and new whole areas of town that have popped up.”
According to the Austin Chamber of Commerce, the number of restaurants opening in the city is higher than the national average. From 2022 to 2023 Austin’s restaurant openings increased by 20% — 10% more than the national average.
What was once a tight-knit community has boomed into a culinary scene. Along with this growth has come significant challenges for local favorites, who remain resilient.
Navigating Austin’s restaurant struggles
Madison Gessner, executive director for the Austin chapter of the Texas Restaurant Association, or TRA, said only 38% of restaurants in the state of Texas were profitable last year.
The top three costs for restaurants are food costs, labor costs and swipe fees. Other fees include high property taxes and utility costs.
According to the National Restaurant Association, or NRA, in the last 4 years, average restaurant food costs have risen by 29%, with labor costs up 31%.
Katie Congdon, president of Dan’s Hamburgers, Inc., has worked in the industry for over 50 years. She said recent food costs have been difficult for all restaurants.
“There’s always challenges with the food supply. I’ve never seen more challenges than in the last four years with the supply of food,” Congdon said.
COVID-19 has had a lasting impact on Austin’s restaurants, with many still overcoming struggles due to inflation, according to multiple restaurant owners in the Austin area. According to the NRA, average food prices remain 25% above pre-pandemic levels.
“COVID was our biggest challenge,” Congdon said. “Getting supplies during COVID, and after that, everything just went up. These last four years after COVID have been extremely difficult for the restaurant business because of inflation, and it is hard to buy.”
Gessner said labor costs for Texas restaurants are at an all-time high, including salaries, wages, benefits and health insurance.
“Labor just continues to go up,” Congdon said. “We’ve got employees that need health insurance, and we’ve had it for over 40 years. We’ve always paid 70% of the medical insurance for our employees, and we want to continue to do that.”
The 2024 edition of the NRA’s Restaurant Operations Data Abstract revealed that in 2022, 36.5% of a sit-down restaurant’s total sales revenue was spent on labor. For fast food or counter service restaurants, 34% of revenue was spent on labor.
Swipe fees
Each time someone uses a credit card or debit card, the restaurant has to pay a transactional fee. This fee can be anywhere from 2-5% of the total transaction, according to the TRA.
U.S. swipe fees are among the highest in the world and have doubled over the past decade, according to the NRA.
Gessner said the TRA is actively collaborating with the Texas Senate to address swipe fees with Senate Bills 2056 and 2026, which aim to increase transparency and competition in the credit card processing market.
“We’re really trying to bring transparency to the process, so that way you know what you’re paying for,” Gessner said. “We’re really hopeful that the legislature will work with us to take a step forward to address this really, like, hidden cost — and it’s so high. It’s often times the third highest line item on [restaurants’ profit and loss] statements.”
Miller, with The County Line, is currently testifying at the Texas Capitol to advocate for reform on credit card processing fees.
“From 2018 to 2024, I paid $3.7 million in credit card fees,” Miller said. “A lot of people don’t realize that little bitty swipe fee adds up.”
Property taxes
On top of food, labor costs and swipe fees, commercial property taxes in Austin continue to rise.
“It is a major challenge for all of us, and I think that the city’s got to look at that and maybe perhaps even some special designations, because as exciting as all the growth is and so forth, I think the city overall [and residents] still want to maintain that history. They still want to maintain the legacy,” Smith, with Scholz Garten, said.
According to Texas Protax, Texas cities’ commercial real estate tax rates are 1.83%, higher than the national average of 1.08%.
Carol Huntsberger, owner of Quality Seafood Market for 27 years, said two years ago, the Travis Central Appraisal District (TCAD) valued her building at almost $6 million more than the prior year.
“I spent [about] $20,000 hiring a company to fight that, and we got it lowered, but I had the same fight last year, and the property taxes still went up,” Huntsberger said. “If I have to fight every year, $20,000 to keep the value of the building so that I can afford the property taxes… that’s not sustainable.”
Congdon said officials often talk about keeping Austin affordable, but argued that rising property taxes have the opposite effect, making it more expensive and challenging for businesses to operate. She believes the city should explore better funding methods that don’t fall on small business owners.
“We need a break on property taxes,” Congdon said. “I mean, we keep hearing if there’s going to be relief, but that really came more on the personal property tax, not on the commercial. We haven’t seen any type of reduction in the rates for commercial at all … and they really need to work on that, because that is really what’s hurting a lot of businesses.”
KXAN reached out to the city of Austin to see what actions toward commercial property taxes are being made and will update this article when we receive a response.
Tariffs
With the new tariff war that started in early April, the TRA is already working to address the potential impact on the restaurant industry.
“The TRA is tracking tariff changes and actively educating policymakers on their impact on Texas restaurants and the 1.4 million individuals of the state’s workforce it employs,” the TRA wrote in a statement to KXAN. “While we support strategic use of tariffs, the ongoing uncertainty tax surrounding these policies place significant pressure on our industry. Increased tariffs will drive up food costs and further strain on both restaurants and consumers. This volatility threatens businesses, jobs and the dining experiences that Texans rely on and enjoy.”
Although it’s too early to tell, Huntsberger predicts imports from China will have the most significant impact on her business.
“They make our equipment and the materials that make that equipment, and paper products and our tennis shoes and our rubber boots and knives, and all the stuff that we use,” Huntsberger said. “So it’s not even just the food cost that’s going to be, but it’s the equipment that we have to have to produce those things.”
Huntsberger compared the prices of an ice machine she purchased in 2012 and 2021 to highlight her concerns about the effects of tariffs.
“In 2012, I paid $9,000 for that ice machine, and in 2021, I paid $25,000 for it: same company, same brand. I have to sell a lot of fish to pay for that,” Huntsberger said. “If parts from that came from China, and it was $25,000 times a 145% tariff, you’re looking at $36,000.”
How Austin’s restaurants are tackling industry challenges
Despite the numerous challenges Austin restaurants are facing, Gessner highlights that there is also a great deal of optimism.
“Restaurateurs are the hardest working people that I know, and they are willing to do anything to take care of their community,” Gessner said.
Congdon said over the years, Dan’s Hamburgers has had a variety of menu items to order. And while it still offers breakfast and chicken strips, she streamlined the menu to shift focus to drive-thru, where the restaurant makes most of its revenue.
“When you’re in business 52 years, and you start out [adding] things to your menu, one at a time, it doesn’t seem like a big deal, but then over years, when you have all these things on your menu, and then you add drive through in the mix, it just a whole another dynamic,” Congdon said. “So we had to streamline our locations and just sell what we mainly sell, which is hamburgers.”
In 2013, Dan’s Hamburgers at Ben White Boulevard and Menchaca Road was closed, torn down and rebuilt with a drive-thru. The business is preparing to do the same for its other two locations in Austin, starting with the Airport Boulevard and then the North Lamar Boulevard locations.
“Our hands are full trying to remodel those and come back stronger and better,” Congdon said.
When The County Line opened in Austin, Miller said there were significantly fewer restaurants, making it a destination restaurant. Now with six locations and several other restaurant options in surrounding areas, he focuses on diversifying each County Line by providing different menu items and creating unique locations.
“You know, when we first opened … we didn’t do lunch, we were closed one day of the week, we didn’t do to-go, we didn’t do catering, and we certainly didn’t do private events,” Miller said. “We’ve added all of those pieces to our business.”
In 1990, The County Line began shipping its barbecue nationwide to provide for those who may have moved away from a close location. Called AirRibs, Miller said the shipping helps advertise their brand.
On top of AirRibs, events, and music shows, private events make County Line the most revenue besides selling barbecue.
“When you’re a little bit slower and there’s not as many people coming through the door, those private events really fill the void of helping your sales,” Miller said. “That’s something that’s really been huge for us.”
There are three facets of Quality Seafood Market bringing in revenue: wholesale, retail and the restaurant. Huntsberger added a monthly subscription seafood box and offers cooking classes to build a community in her business.
“We’re still creating that environment where people want to come back and they want to bring a friend, or they want to have their family here,” Huntsberger said. “We get to help in multiple ways. They come and they can eat here, fall in love with fish, and then learn eventually how to cook.”
Smith relies on Scholz Garten’s rich history and has shifted Scholz’s menu to be an authentic German menu that has brought people back for over 150 years.
“Got some items that aren’t, you know, totally German in nature, but you know, we’re doing schnitzels, we’re doing the sausages, we’re doing some traditional German dishes that give us a little unique spin, and I think people you know love to try different things and have that experience,” Smith said.
Although restaurants face many challenges, Miller has a positive outlook on the work restauranters do.
“Everybody has their woes and everything, but we love serving people, and seeing people be happy when they leave the restaurant,” Miller said. “We’re in a super cool industry that’s a hard one to run. It changes every day, but it’s a lot of fun.”