IOWA CITY, Iowa — Iowa restaurants are facing a perfect storm of challenges as fewer diners walk through their doors and costs continue to climb.
Owners and experts say that the so-called “Ozempic effect," the impact of appetite-suppressing, popular GLP-1 drugs, is only one factor in a much larger set of pressures.
At the Walker Homestead Farm and Winery near Iowa City, owners say they’ve noticed changes in how people dine.
“People are just doing smaller portions,” said Kristy Walker, owner of Walker Homestead.
“We've really kind of seen, people taking food home," said Diana Giles, manager and food and beverage director of Walker Homestead. "A lot, huge uptake in our number of take-home containers that we've been going through," said Walker.
“They don't have the desire to eat as much," said Bob Walker, owner of Walker Homestead.
Jessica Dunker, president of the Iowa Restaurant Association, says drugs like Ozempic are contributing to declining business.
“About 5% of the population takes a GLP-1 whether it's for weight loss or for diabetes. And when you look at knocking the appetites out of 5% of the population, that's bound to have an impact on restaurants and bars across the state,” Dunker said.
But this “Ozempic effect” is only part of a bigger challenge. For the first time in decades, Iowa restaurants are seeing fewer customers.
“For the first time, even for the first time in 20 years I would say, we're seeing less people walking through our doors, foot traffic is down. That's how we measure it, and that's worrisome when you see foot traffic down,” Dunker said.
University of Iowa Associate Professor Peggy Stover said other economic factors are also playing a role.
“Rising food prices, the lack of labor, and also wages within the industry. Consumers, again, pulling back on the discretionary spending, inflation, layoffs, or the fear of a layoff,” Stover explained.
The combination of reduced appetites, economic pressures, and changing dining habits means Iowa restaurants are navigating a challenging landscape.
Dunker said, “It is a difficult time in the restaurant industry right now and we're getting it from every direction. We are having labor shortage issues. We are having the same cost of good issues that every consumer is facing.”
Even as some restaurants adapt by offering smaller portions or emphasizing healthy options, Dunker said supporting local restaurants remains critical.
“We sure would welcome you in,” she said. “If you have a restaurant you like, go be a patron, go buy something, because we are very, very happy to serve you and welcome you.”
In 2024, nearly half of Iowa’s restaurants did not turn a profit, despite high revenue, highlighting the mounting challenges in the industry.