When Malcolm Bedell opened Honey’s Fried Chicken Palace in Thomaston last year, he had dreams of bringing the restaurant to locations across the state.

But one question is stopping him from moving forward: “Who’s going to run it?”

Bedell and other employers throughout Maine say they’re struggling to find and retain staff — in large part because workers can’t find affordable housing.

“Every single industry sector is being impacted by the lack of housing,” said Quincy Hentzel, CEO of the Portland Regional Chamber of Commerce. “Almost every business is finding a shortage or a difficulty in finding employees.”

Small business owners say they can’t afford to pay workers the high wages necessary to keep up with rising housing prices, and even when they can, there’s nowhere for employees to live.

These challenges are particularly visible in the food service industry, with some restaurants cutting lunch hours or closing down on slower days of the week, Hentzel said.

In extreme cases, employers say they feel they have no option but to close down for good.

Honey’s Fried Chicken Palace was an expansion of Bedell’s first fried chicken restaurant, Ancho Honey, which opened in Tenants Harbor in 2019. With five years under his belt and two finalist awards for best burger and best fried chicken in the state, Bedell started to expand, with the hope of starting a Maine-based chain.

Instead, just one year after he opened his new counter-service restaurant, Bedell made the decision to shut down Ancho Honey — a choice that was fueled in large part by problems finding staff.

And he’s not alone. 

Mike Fraser has worked in the restaurant industry since the 1990s, taking the leap from employee to employer over a decade ago. He now owns or co-owns five restaurants in Portland. But as the cost of living has ballooned since the pandemic, he said he’s struggled to keep paying employees a living wage.

This was a factor in his decision to close the Portland bar and restaurant Paper Tiger at the end of the summer, he said, noting that his staff consistently told him they needed higher wages to keep up with housing costs.

“Not being able to operate a business where employees feel like they are appropriately compensated, enough so that they can live where they want to live and have the lifestyle they want to live, is the majority reason why,” Fraser said.

While he doesn’t plan to close down his other locations, Fraser said he just took a job at a roofing company because of uncertainty in the industry.

“Every year, for the last couple years, I’ve lost money in the restaurant industry, and nobody’s happy,” Fraser said. “I’m questioning my life choices.”

Staff only had two weeks’ notice that the restaurant was shutting down, leaving them scrambling to find new jobs right as seasonal work was winding down, said former Paper Tiger bartender Ian King. He said he believed the restaurant was making a profit and was surprised to hear that was behind the decision to close.

“It put us all in a very tight spot,” King said. “Not a lot of places were hiring at the time.”

He found a new position at the nearby Low Stakes Lodge, but was job hunting again just one month later when the bar announced its closure. Now he splits his time between CBG Bar & Grill and Maps.

King has worked in the service industry for the last 15 years off and on, and said he made the switch from back of house to front of house in 2023, a choice driven in part by the need to make more to pay rent.

“Most of the people I know back of house have roommates or live with their partners,” King said. “I don’t know anyone living alone unless they’re a chef.”

Housing costs pushed him and his wife to move out of Portland to South Portland in 2021, where they were able to find a renovated two-bedroom with parking, a dishwasher and laundry in-unit for $1,400 a month.

The median housing cost for renters in Maine jumped from $870 per month in 2019 to $1,210 per month in 2024, according to data from the U.S. Census Bureau. In Portland, the increase went from $1,245 to $1,711 per month. 

Rebounding from the pandemic

The hospitality industry was among those hit hardest by the pandemic. Employment rates in accommodation and food services tanked in 2020, and didn’t return to prepandemic levels until summer 2023, according to data from the Maine Department of Labor.

The number of businesses continued to grow during that same time period, leaving more restaurants to fight over a smaller labor pool.

“Anytime you need an icebreaker question, it’s just like, ‘Well, where did all the staff go?’” Bedell said. “I think a lot of people left traditional work during COVID and just sort of haven’t come back.”

Initially, average weekly pay for restaurant workers saw a boost after the pandemic. But in more recent years, wage increases haven’t kept up with growing rent prices in some areas of the state.

“Housing was one of the items where even if the average cost of living was being covered by wages, housing wasn’t,” said James Myall, an economic policy analyst at the Maine Center for Economic Policy, explaining that housing costs increased faster than inflation. 

It took several years to recover from restaurant closures during the pandemic, said Becky Jacobson, the executive director of Hospitality Maine, estimating that the number of restaurants rebounded by 2023. Since then, the number of openings and closings have fallen in the realm of normal business churn in an industry sensitive to economic changes, Jacobson said.

“Some of that is cyclical, depending on what’s going on with the economy. If we see a recession, then you’ll see closures go up. When the economy rebounds and there’s more discretionary spending, then they open back up,” she said. “So I don’t think we’re seeing anything unusual right now.”

While she isn’t seeing a large number of restaurants closing down, she is seeing them adapt by closing a few days a week or changing opening hours.

“The industry is resilient and works around whatever the issues are, but there’s no doubt that sooner or later, the lack of affordable housing in some areas has to impact all industries,” she said.

Restaurants are notorious for running on thin margins. If an owner can make a five percent profit on sales, they’re making it as a restaurant, said longtime chef and restaurant owner David Turin of David’s Restaurant in Portland and David’s 388 in South Portland. 

But a five percent profit on sales doesn’t leave much wiggle room, and the rising cost of everything from food to rent has owners struggling to make the math work. 

“The fact of the matter is right now that every restaurant that is open, certainly in Southern Maine, every single restaurant is a low-margin business,” Turin said. “We’re all low-margin and we all have to do more volume as a result.”

While Turin said he believes he is paying his employees enough to afford housing, he said he has lost around 20 staff members in the last four years because they couldn’t find places to live. Some even left the state.

‘It’s an economic issue’

As businesses reckon with these challenges, a new statewide coalition is stepping in to bring more attention to the issue. In early November, the Maine State Chamber of Commerce unveiled a new pro-housing campaign highlighting the need to build homes to support workforce growth. 

The Build Homes, Build Community coalition, which they formed along with the Portland Regional Chamber of Commerce, the Maine Affordable Housing Coalition and the Maine Real Estate and Development Association, is aiming to educate communities on Maine’s critical need to develop housing.

“Housing is not a housing issue anymore. It is an economic issue,” said Maine State Chamber of Commerce President Patrick Woodcock at the Nov. 5 campaign kickoff event, describing how the state’s housing challenges are making it difficult for businesses to operate. 

The group cited the state’s economic forecast as a reason for concern. In 2024, employment grew by one percent. This year, that number was down to .02 percent, and is projected to drop to .01 percent in 2026, according to a bi-annual economic forecast report from the Maine Consensus Economic Forecasting Commission released this month. 

Leisure and hospitality, which accounted for about 10 percent of Maine jobs in 2025, is expected to see a slight drop in numbers. Employment in the field was up 4.5 percent last year, but is projected to stagnate and begin declining through 2029, according to the report.

While building is ultimately the best long-term solution to escape the housing crisis, Myall from the Maine Center for Economic Policy said policy changes can help alleviate the burden of housing costs in the short term. 

He pointed to raising the minimum wage, as Portland just did, as one option, which he said isn’t likely to result in job losses unless it’s raised too high, too fast. Policies like the Eviction Prevention Program also can play a big role.

“Some of those programs that help people pay rent can be useful, especially if they’re particularly targeted at groups that might be especially vulnerable,” Myall said, such as low-income workers in tourist areas where second homes have become more popular.

Workforce housing projects throughout the state have met community opposition, something that Woodcock says is fueling the housing crisis in a bigger way than people realize: people who oppose housing projects and argue they are trying to protect the character of their community may not always connect the development with the role it could play in lowering housing costs.

“We’re trying to make that connection because it is so easy to make an opposite argument that the impact of this specific thing will have on this specific community,” Woodcock said. “The collective benefits of all of us saying yes to housing swamps all of the concerns that we hear.”

He said the need for more housing is stark.

“We simply cannot grow if we have people moving away and [are] not attracting people into our workforce,” he said.

This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.