https://triblive.com/business/why-pittsburgh-restaurants-are-closing-despite-packed-dining-rooms/
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Herky Pollock inside Ritual House in Downtown. (Courtesy of Legacy Hospitality Group)
Con Alma, the Downtown restaurant and jazz club, made waves when it launched a GoFundMe campaign last December. Though crowdfunding is more commonly associated with personal emergencies, the business made a direct appeal to loyal patrons, seeking $150,000 and hosting a special fundraising gala to keep its doors open.
“We would have closed if that hadn’t happened,” co-owner Aimee Marshall said of the fundraiser. “And we’re still looking for other ways to catch up. Right now, it’s week to week.”
Con Alma cited challenges familiar to many restaurant owners: rising food costs – this summer, limes jumped from $36 to $90 per case and avocados from $48 to $96 – as well as labor, insurance, utilities, credit card fees, razor-thin margins and debt.
Now, rather than promoting itself mostly as a live music venue, Con Alma is repackaging itself as a chef-driven restaurant with premium cocktails and a global wine list, said Marshall, hoping locals “appreciate the experience.”
Con Alma is far from alone. In recent months, a string of high-profile restaurant closures and bankruptcy filings has raised questions about the health of Pittsburgh’s dining scene. Many have occurred at restaurants that outwardly appeared to be thriving, with full patios and packed reservation lists. Challenges seem to extend across all dining categories, from national chains like Smokey Bones – which, in April, permanently closed all of its restaurants nationwide, including three in southwestern Pennsylvania – to local independent staple The Abbey in Lawrenceville, which declared bankruptcy in May.
“Just because you’re busy doesn’t mean you’re making money,” said Ben Fileccia of the Pennsylvania Restaurant & Lodging Association. Nationally, he said, more than 80% of operators have said their food costs were higher over the past year, with a 34% rise from pre-pandemic levels and 39% for labor, according to the association’s reporting.
“Restaurants aren’t closing because people stopped going to restaurants,” Fileccia said. “They’re closing because the math has gotten hard.”
Restaurant owners interviewed by TribLive described an industry still grappling with the aftershocks of the pandemic, inflation and changing consumer habits. Yet even as some Pittsburgh restaurants shut their doors, other operators are expanding, opening new locations and investing in new concepts. While diners pinch pennies and costs remain elevated, expanding operators say success increasingly depends on offering an experience people can’t get at home – even as that experience becomes more expensive to deliver.
“People are looking for value,” said Pat McDonnell, CEO and owner of Restaurant Holdings LP. “Value is not necessarily how much you pay, but is what you paid worth it.”
Pat and Nancy McDonnell have spent five decades in Pittsburgh’s restaurant industry, from introducing national chains like Chi-Chi’s and Boston Market to operating Atria’s, Juniper Grill and 1930 Cigar Bar.
Specializing in “upscale casual,” their restaurants serve scratch-made dishes and handcrafted cocktails, based on a lesson Nancy McDonnell gleaned in the late 1990s. During the couple’s Boston Market days, the restaurant shifted away from cutting and peeling whole potatoes to pre-processed and pre-made ingredients. McDonnell noticed the first reaction wasn’t from customers, but from employees.
"I can remember them saying, ‘Oh my gosh, are you kidding me?’ " McDonnell said. “Because they were proud of that, that everything was quality.”
Pat McDonnell said he now “preaches” to employees frequently, “If we’re not casual dining, we better provide an experience that’s better than casual dining,” saying it extends from staff appearance and training to menu knowledge.
“People vote,” he added, “when they get the check.”
Casey Henderlong is director of events and public relations at Richard DeShantz Restaurant Group, which has a dozen spots ranging from Meat & Potatoes and Coop de Ville to Poulet Bleu and Fish nor Fowl. A 26-year hospitality industry veteran, she echoed the McDonnells.
“The only way you can stay resilient is to stay consistent,” she said. “And that’s food, beverage, service. People don’t want to go out and spend money when they don’t know what they’re going to get.”
At Commonplace Coffee, a sense of value isn’t defined solely by the drink. While other restaurant operators are poring over labor costs, in May, the coffee company voluntarily recognized a new employee union, Commonplace Coffee Workers United, representing its baristas, roasters and staff. Like restaurants, coffee shops face rising labor costs along with climate-related supply pressures and volatile commodity prices, CEO Alisa Paul said.
But the move to recognize a workers’ union and preserve “the feel of a small family-owned business” is part of what Commonplace customers are paying for. The chain recently opened its eighth and ninth retail locations – at Northland Public Library and in Shadyside at the former Georgie’s Coffee – based on demand for community spaces they were confident would translate into sustainable margins.
Like other operators, Commonplace is also trying to absorb higher costs before passing them on to customers.
“Across the board, there is this real open question around customers’ mental model and how they view the value of the product they’re getting,” Paul said. “One of the things that we hold really critical in that effort is transparency. If and when we raise prices, we tell our customers.”
Herky Pollock is CEO of Legacy Hospitality Partners, a dining and “eater-tainment” group that operates restaurants including SugarBird, Ritual House, Palm Palm, The Common Good and Shorty’s. He said that even amid rising prices, he sees diners seeking unique experiences.
“Those of us who lived through the pandemic and came out of the pandemic have realized that the world’s changed,” Pollock said. "What we’re trying to give to our diners, our customers, our friends, it’s not just a meal but a connection.
“We subscribe to the theory that really good food and really good hospitality doesn’t have to be expensive,” he added. “People can come to us in shorts and a Steelers jersey, or they can come to us for their wedding, and we’ve had both at the same time.”
Pollock said shrinking margins have forced restaurants to become more flexible. Rather than relying on higher prices, Legacy looks for ways to increase volume by following consumer trends and adapting menus seasonally.
Recently, Chilean sea bass disappeared from the Ritual House menu when tariffs and wholesale prices pushed the entrée toward $75. It was replaced by black cod. The restaurant also buys some products months in advance, recently ordering lobster tails for the fall – “almost like you’re stockpiling oil or gas,” Pollock said – to hedge against future price increases.
Meredith Boyle and chef Fernando Navas own Balvanera, an Argentinian restaurant in the Strip District, and are working to open a second restaurant this fall, Casa Anchoa in Downtown. They’re focused on preserving guest experience before passing rising costs on to diners.
“You try to kick it down the road as long as you can,” she said.
Boyle and Navas established Balvanera in New York City in 2014 before bringing the restaurant to Pittsburgh’s Strip District nearly 10 years later.
Boyle believes Pittsburgh’s dining scene brought some tradeoffs – for example, higher overhead and startup costs versus lower overall operating expenses here. Pittsburgh also offers a distinct advantage over New York City: a stronger culture of repeat customers and neighborhood loyalty.
“That sense of community that happens within restaurants, that is a natural part of the fabric of Pittsburgh,” Boyle said.
The best way to support restaurants is, of course, to dine out more often. But Boyle and other operators encouraged customers to leave online reviews, spread the word, provide direct feedback and honor reservations, which help restaurants plan staffing and avoid lost revenue.
Fileccia, of the Pennsylvania Restaurant & Lodging Association, called on diners to seize the day. “If you have that restaurant where you say, ‘I’ve always wanted to try that place,’ today is the day, because it might not be open tomorrow.”
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