![\"Exterior](\"https:\/\/i0.wp.com\/timesofsandiego.com\/wp-content\/uploads\/2026\/02\/Dreamboat-exterior1-.jpg?ssl=1\")
<\/a>The University Heights restaurant Dreamboat closed after a short run. (Photo by Frank Sabatini Jr.)<\/p>\nFirst, the COVID-19\u00a0pandemic shut many restaurants down. <\/p>\n
Then came persistent supply shortages after kitchens reopened.\u00a0<\/p>\n
Fast forward to 2026, and mix in minimum-wage hikes, escalating rents and soaring food costs, spurred by tariffs and inflation.<\/p>\n
It all adds up to this: Restaurateurs are battling their toughest survival challenge since the Great Depression<\/a>.<\/p>\n San Diego\u2019s unusually high spate of restaurant closures in the past eight months includes Seventh House, Flap Your Jacks and URBN Wood Fired Pizza in North Park; Breakfast Republic and Chocolat in Hillcrest; Barrio Star in Bankers Hill; King & Queen Cantina in Little Italy; Bottle Rocket Bar & Grill in the East Village; Harley Gray in Mission Hills, and more.<\/p>\n The promising vegan diner in University Heights called Dreamboat, along with its seductive back cocktail lounge named Vulture, are among the most recent casualties.\u00a0<\/p>\n The dual venture opened less than a year ago as a collaboration between Kory Stetina, who owns Kindred in South Park, and CH Projects, which operates multiple themed hotspots throughout San Diego.<\/p>\n Stetina referred us to his Instagram post when asked why the operation closed on Feb. 8. In the post, he cited \u201chigh opening and operating costs combined with the economic realities of today\u201d which made going on \u201cunsustainable.\u201d He also alluded to challenges that went into \u201cthe design and build-out in an old building.\u201d<\/p>\n The situation has left many diners wondering if their next meal at their favorite eateries will be their last there.<\/p>\n City and state regulations \u00a0<\/strong><\/p>\n City and state regulations indeed add to the woes of San Diego restaurant owners, especially those with ambitious design plans.<\/p>\n Hillcrest Business Association<\/a>\u00a0executive\u00a0director Ben Nicholls calls some of today\u2019s rules \u201cbarriers to innovation,\u201d referring in part to the recent closure of Barrel & Board in the heart of Hillcrest.<\/p>\n \u201cThey had a speakeasy in the back. The owner tried to do something creative with the space and bring in piano entertainment. But she couldn\u2019t get a stable entertainment license because the city said there are already other businesses with entertainment licenses in that area,\u201d Nicholls said.\u00a0<\/p>\n The city also now charges up to $30 per square foot for \u201cstreetaries,\u201d those outdoor spaces annexed to restaurants that popped up everywhere during the pandemic for little to no cost.<\/p>\n \u201cMany of them are gone because the price now is more than what some restaurateurs pay for their indoor spaces. It\u2019s completely regressive,\u201d he added.<\/p>\n According to Sarah Mattinson, San Diego chapter president of the California Restaurant Association<\/a>, long inspections before opening a restaurant combined with subsequent reviews by cities and health departments, are tough on new startups and those operating in the red.<\/p>\n \u201cSomebody once said that we are more regulated than a nuclear power plant,\u201d she quipped.<\/p>\n Tariffs imposed by the Trump administration over the past year also have put a strain on restaurant owners, most of whom are running profit margins between 3% and 5% versus 8% to 10% prior to COVID,\u00a0according to\u00a0Mattinson.<\/p>\n \u201cThe tariffs affect food costs as well as kitchen equipment, furniture and to-go packaging,\u201d she added, while pointing out that a reduction in local tourism is also negatively affecting restaurants, particularly in the Gaslamp Quarter and East Village.<\/p>\n Those areas in the last 10 months have lost nearly a dozen restaurants, such as the upscale Kaluu Mexican Restaurant, Copa Vida coffee cafe and Henry\u2019s Pub.\u00a0<\/p>\n Customers pull back<\/p>\n Overall, people are dining out less. Combined with rising labor and utility costs, many restaurants are in crisis mode, said the California Restaurant Association\u2019s chief executive officer Jot Condie, who is based in Sacramento.<\/p>\n \u201cSeventy-two percent of restaurants in San Diego County reported that their customer traffic was down in 2024 and 2025 compared to previous years,\u201d he said. \u201cBased on a November 2025 survey, of the 11,594 restaurants within San Diego County,\u00a0seven\u00a0percent said they are closing an additional day of the week.\u201d<\/p>\n Condie said pinning down exactly how many restaurants have locked their doors for good is difficult because some close, then reopen or relocate. \u201cYet based on our observation over the last year, more restaurants are closing rather than opening,\u201d he added.\u00a0<\/p>\n<\/a>High rent is the suspected reason why Flap Your Jacks, the popular breakfast spot in North Park, suddenly closed. (Photo by Frank Sabatini Jr.) <\/p>\n