We have created an “affordability crisis” for restaurants and other small businesses in Chicago today. Small businesses are the heart and soul of our city’s neighborhoods and a true economic engine. Yet, if you looked at the proposed budget, alongside new fees and regulations, you would think just the opposite.
There are more dangers than you know, which extend well beyond the proposed head tax, the elimination of the tip credit and mandates in the recent paid-time-off ordinance.
Make no mistake: Small businesses are owned by passionate residents willing to take on debt and uncertainty for the dream of building a business and serving the community. These owners hire locally and foster development in neighborhoods across the city.
However, the current climate has made it more challenging than ever to start and operate a small business. This community is not full of high rollers and billionaires, yet many are targeted consistently by new taxes and fees.
Restaurants must contend with the new mandates imposed on every other small business while facing difficulties stemming from the elimination of the tip credit, which has resulted in lower take-home pay for servers, position eliminations, schedule reductions and restaurant closures.
Mayor Brandon Johnson’s 2026 budget proposal would make matters even worse. There is the head tax, which punishes growing businesses and will result in fewer patrons and customers working in the city. Then there is the proposed increase to the so-called cloud tax from 11% to 15%, which affects so much more than cloud services. This tax will hit hard small businesses, especially restaurants, because they lease everything from ovens to ice makers.
And there is the staggering increase in license fees and fines, which will disproportionately impact the small business community. The mayor’s proposed budget increases some business license fees from $250 to $500 and others from $250 to $1,000. Doubling and quadrupling licensing fees on small businesses still reeling from onerous mandates will not help them create jobs and support their communities. If anything, it will do the opposite, leading to more empty storefronts.
The budget does not spare restaurants from increased regulation fees, either. Instead, it doubles restaurant food inspection fees and significantly increases certain fines. Raising licensing and food inspection fees will not bode well for small businesses, restaurants or the Chicago economy.
We understand Chicago politicians are in a difficult spot and that shared sacrifice is necessary to meet the moment. But let us be clear: The small business and hospitality communities have been hit hardest by new and costly mandates. Calls to cut red tape and make meaningful process reforms have not advanced quickly enough to offset them.
These process improvements could have sparked economic development, which, in turn, would have raised revenue to help fill the budget void. Faster licensing and permitting often allow small businesses to open more quickly, reducing commercial vacancies while creating tax revenue. In turn, they get economies moving, something that should not be stymied by red tape.
Chicago’s business and hospitality communities were already struggling with the affordability crisis because of high property taxes, tariffs, inflation and immigration raids. We urge Johnson and the City Council to recognize the crucial role small businesses and restaurants play in communities and to support us, rather than treating us as just another piggy bank.
Elliot Richardson is president and co-founder of the Small Business Advocacy Council. Sam Toia is president and CEO of the Illinois Restaurant Association.
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