Restaurants Show Where Puerto Rico’s Slowdown Bites First, With No Cushion for Consumers and Businesses

Puerto Rico’s economic slowdown now has a face at the dinner table. Consumers are eating out about a quarter less than a year ago, from 7.6 restaurant visits a month to 5.7, according to a new study by the Puerto Rico Restaurant Association (ASORE), and the government’s main attempt to ease the pressure, a two-month sales-tax exemption on prepared food, is stalled at the Financial Oversight and Management Board because no one has said how to pay for it.

The two facts belong to the same story. The Board’s own quarterly report, as CB reported on Oct. 19, describes an economy entering “a period of slower, more measured growth rather than a downturn,” with the Economic Activity Index down 0.2% in the first nine months of fiscal 2026 and $56.2 billion in federal funds still available that may be masking structural weaknesses.

Households and small operators feel that kind of slowdown first, and restaurants, which live on discretionary spending, are a sensitive gauge.

The dispute over relief shows how little room there is to respond. The Board says the exemption treats a symptom, not the cause, of high energy costs, while the restaurants say the measure helps consumers more than operators. The survey, the context and what each side wants follow.

Fewer visits, thinner budgets

Rising household expenses and growing economic uncertainty are reshaping Puerto Ricans’ dining habits, with nearly 80% of consumers saying that financial pressures could lead them to eat out less often, according to the study presented Thursday at the 2026 Asociación de Restaurantes de Puerto Rico (ASORE) Restaurant Summit.

The study was carried out in collaboration with Gaither, a Puerto Rico-based market research and consulting firm that specializes in consumer behavior research, which interviewed 1,023 consumers aged 18 to 69 across five geographic research regions.

Of those interviewed, 71% reported higher personal expenses than a year ago, while 77% rated their household finances as “fair” or “poor.”

The survey found that consumer-reported monthly spending fell from $633 in 2025 to $566 in 2026, an 11% decrease. The research also points to a 25% decline in monthly restaurant visits, from 7.6 per consumer in 2025 to 5.7 in 2026.

The squeeze is visible in business failures. Bankruptcy filings of all kinds reached 4,146 through August, on pace for a record, with Chapter 7 liquidations up 47.2% in July, as CB reported in September, and economist Chantal Benet Arbona linked the surge mainly to the cost of living.

Restaurants are among those affected: at least 25 food businesses filed for bankruptcy protection in the first three months of 2026, carrying about $11.9 million in debt, according to Boletín de Puerto Rico data cited by Metro Puerto Rico, a Caribbean Business sister newspaper.

“The government has to do something. We’ve talked about reducing the business inventory tax, looking at how we can join the conversation on the water crisis, meet with the DDEC, the tourism company, the legislature, the Governor’s office; we only hope that somehow we can obtain some sort of solution for this. Our members have adjusted financially to this situation, it’s the government’s moment to act.”

Sonia Navarro, president of ASORE

Even so, Felipe Flores, vice president of South American Restaurants Corporation (SARCO), said there is room for hope: 89% of those surveyed said they see dining out as more than eating at a restaurant, a way to connect with friends and family.

As many as 70% say they enjoy going to restaurants more than grocery shopping, which suggests that economic pressures have not eliminated demand for restaurant experiences. Consumers are simply far more selective about where they spend their money.

“Consumers are not necessarily abandoning restaurants, but dining out is increasingly competing with other household expenses,” he said.

What restaurants can control

Restaurants can fight this decline in visits by guaranteeing excellent service, flavor quality and impeccable cleanliness, according to Chantal Benet, senior economist at Inteligencia Económica, who collaborated on the study.

Some 96% of those surveyed identified cleanliness, staff friendliness and food taste as essential or very important.

For the economist, restaurants’ main competitors are not other restaurants but the leftovers consumers keep at home for the next day.

The study found that 45% bring food prepared at home when eating lunch away from home, and 73% of those who bring lunch cite saving money as the reason. In addition, 69% of casual-restaurant customers say price strongly influences their decisions.

Larger Economic Context

The shift in consumer behavior comes amid an increasingly challenging economic landscape for Puerto Rico’s small and medium-sized enterprises (SMEs).

Rising electricity costs, inflationary pressures, higher operating expenses and persistent labor challenges have placed additional strain on local businesses, particularly restaurants operating on tight profit margins.

As consumers become more cautious with their spending, restaurant owners face the dual challenge of managing rising costs while keeping prices competitive and delivering the value customers increasingly demand.

The sector has little cushion. ASORE’s own projections for 2026, published in January, showed 46.2% of restaurants reporting lower sales in 2025, the first year since 2022 in which declines outpaced growth, according to published reports.

The industry generates more than $6 billion in economic activity and supports more than 90,000 direct and indirect jobs, according to the association, with 4,918 restaurants operating as of the second quarter of 2025. That is the base now absorbing both fewer diners and higher energy bills.

“The government has to do something. We’ve talked about reducing the business inventory tax, we’ve talked about looking at how we can join the conversation on the water crisis, meet with the DDEC, the tourism company, the legislature, the Governor’s office; we only hope that somehow we can obtain some sort of solution for this. Our members have adjusted financially to this situation, it’s the government’s moment to act,” said Sonia Navarro, president of ASORE.

The statement comes as the Centro Unido de Detallistas (CUD), 5% of whose members identify as restaurants or food-service establishments, has sounded the alarm over the financial challenges facing Puerto Rico’s SMEs, warning that as many as 12,000 businesses could be at risk of closure, potentially jeopardizing approximately 70,000 jobs.

The organization has pointed to rising electricity costs, mounting operational expenses and other economic pressures as significant threats to the survival of local businesses.

The relief that stalled

Asked about the measures Gov. Jenniffer González Colón has proposed to ease the burden on consumers and businesses, including a temporary exemption from the sales and use tax (IVU) on prepared foods during November and December, Navarro said the effort does little for entrepreneurs and mainly benefits consumers.

González Colón’s other efforts include $18 million allocated to a household energy-efficiency program and $3 million in assistance intended to benefit 1,000 small and medium-sized businesses facing rising electricity costs.

However, the proposed tax exemption has met objections from the Financial Oversight and Management Board, which raised concerns about its estimated $56.8 million fiscal impact, according to a preliminary Treasury Department estimate.

The Board’s objection goes beyond the number. In a letter dated this week, it asked that the suspension, scheduled for Nov. 1 through Dec. 31, not take effect until its review is complete, said the issue was not discussed at an Oct. 21 meeting with the government two days before the announcement, and called the measure a response to a symptom, not to the cause of higher energy costs, which it linked to a lack of lower-cost generation. Restaurants, it noted, would still face those costs when the exemption ends.

The same letter placed the exemption in a wider fiscal frame: a bill to raise pensions that would cost more than $230 million a year, collective bargaining increases above $100 million, and federal Medicaid funding that expires in fiscal 2028 with no contingency plan, all proposed without a recurring source of funds. The Board’s quarterly report estimated that risks could reach up to $3.8 billion a year from fiscal 2028 through fiscal 2030.

The governor met with the Board’s executive director, Robert F. Mujica, on Thursday. The government says it is evaluating several mechanisms that would not alter the budget, without detailing them, and the Senate has floated tapping the Emergency Reserve for about $131.7 million, according to published reports.

The administration has also filed bills for a commercial Property Assessed Clean Energy (C-PACE) program that would finance solar systems and batteries for businesses without upfront payment.

What restaurants are being told to do

To stay relevant and push back against an increasingly difficult economic scenario, researchers at the summit offered four main recommendations:

•  Compete for dining occasions and connect them with sentimental value.

•  Make quality visible.

•  Reduce friction: simplify ordering, pickup, delivery and payment.

•  Strengthen social media engagement: use digital content to influence restaurant discovery and purchasing decisions.

As economic uncertainty continues to influence household budgets, the study suggests Puerto Rico’s restaurant industry faces a consumer who remains interested in dining out but increasingly expects every visit to deliver value, convenience and a consistent experience.

Taken together, the survey, the bankruptcy data and the Board’s letter show a squeeze from both sides: demand eroding at the table and costs rising in the kitchen. The recommendations are steps restaurants can take on their own, but the largest cost, energy, is outside their control, and the relief that targets consumers has run into the same fiscal limits that constrain every other measure on the table.

ASORE and the CUD both want help on the cost side, from a lighting-efficiency credit and a review of business electricity billing to a phase-out of the petroleum tax known as la crudita.

Whether the island funds any of them will help decide whether the slowdown stays the “slower, more measured growth” the Board describes, or tips toward the closures the bankruptcy figures already suggest.