Why Are So Many Sacramento Restaurants Closing?

SACRAMENTO (CBS13) — The final days at Jim-Denny's are here.

"We all work side by side, and it's ending," said Leilani Naylor, the restaurant's manager.

The longtime Downtown Sacramento diner is the latest restaurant to announce it's closing for good.

"Since the Convention Center has closed down we have lost over half of our business and the rents are going up and we just can't compete anymore," Naylor said.

Just last month, Original Perry's shut its doors after more than 50 years due to rising rent. And in November, Opa! Opa! announced it would close citing minimum wage increases before deciding to relocate to Midtown.

Numbers from the Downtown Sacramento Partnership show 38 restaurants have opened since January of 2018. Six have closed and five were replaced with new restaurants.

With more and more restaurants closing their doors in recent weeks, we asked the California Restaurant Association what's behind the trend. CBS3 has learned one reason is the rising cost of rent.

READ: Dozens Of Restaurants Participating In Sacramento's Annual Dine Downtown Event In January

Experts say when commercial rents rise, mom and pop restaurants don't have the negotiating power like big chains do. Therefore, at times, rent can be doubled. Another trend is the rising labor costs which the association says forces employers to pay more for worker's compensation and payroll taxes.

So, we asked if there is a restaurant bubble burst. Experts say no, but tell CBS13 there is a change in landscape with more restaurants closing and fewer opening.

Now, years of moments shared inside Jim-Denny's will just be memories.

"Just too bad they are not going to be around because obviously, it's a popular place," a customer said.