Holding On, With Less Room to Maneuver
Acknowledgments:
Ziqi Zhou and Euginia Dengah led data collection and engagement with participating businesses. The report was written by Saloni Tandon, with writing and research contributions from Ziqi Zhou. Jeff Hornstein provided review and editorial guidance.
The Economy League extends its sincere thanks to the John Chin, Haoyi Shang, and Shuya Guan from Philadelphia Chinatown Development Corporation (PCDC), Kelvin Zheng from the Asian Chamber of Commerce, and The Welcoming Center for their support in connecting the research team with businesses and strengthening the reach of this work. We are especially grateful to the business owners and representatives who shared their time, experiences, and perspectives. Their participation made this research possible.
What our new survey data suggests about costs, demand, and operating conditions for Philadelphia’s small businesses
Between March and August 2026, the Economy League surveyed small businesses across Philadelphia to better understand how firms are navigating changing economic and policy conditions. The current sample includes 34 unique businesses, 26 of them in Chinatown, and is heavily weighted toward very small, established firms: 91 percent employ fewer than 10 people, while 68 percent have been operating for at least six years. Because businesses were recruited through convenience and snowball sampling, the results are not statistically representative of all businesses in Philadelphia or Chinatown. They are best understood as an early diagnostic of the conditions participating businesses are experiencing.
The emerging picture is consequently more specific than one of general small-business distress. Costs are rising broadly; demand is considerably weaker among the Chinatown respondents; employment has so far remained stable; and the mechanisms behind the demand gap remain only partly understood.
What You Need to Know
- Rising costs are the most widespread pressure in the survey. Overall, 97 percent of businesses reported higher operating costs, including 100 percent of Chinatown respondents. This finding is consistent with broader economic data: Philadelphia-area prices were 5.4 percent higher year-over-year in June 2026, including increases of 4.2 percent for food and 5.2 percent for food purchased for home consumption.
- Demand has been considerably weaker than costs. Among businesses able to assess customer demand, 48 percent reported a decline and another 35 percent reported no change; only 16 percent reported growth. In Chinatown, 96 percent reported flat or declining demand, including 56 percent reporting an outright decline. Broader Center City indicators do not show the same degree of weakness, suggesting that the Chinatown result cannot yet be explained simply by a downtown-wide slowdown.
- The most significant finding is the interaction between the two. Seventy-six percent of businesses overall—and 92 percent of Chinatown businesses—were facing higher costs alongside flat or declining demand. This leaves firms with fewer ways to absorb rising expenses, particularly when customers themselves are price-sensitive.
- Businesses have responded cautiously rather than through substantial employment cuts. Ninety-one percent reported broadly stable staffing, while 67 percent of businesses for which the pricing question applied had raised prices. Most price increases were modest, and some businesses reported delaying investment, changing staffing or schedules, or adjusting hours rather than substantially reducing employment.
- The customer base matters to understanding Chinatown’s results. Eighty-five percent of the full sample and 92 percent of Chinatown businesses serve customer bases in which foreign-born consumers make up a substantial share. Respondents pointed to international students, changing immigrant settlement patterns, immigration-related concerns, and weaker household purchasing power as possible influences on demand. The secondary evidence is mixed: international enrollment overall has remained high, while Chinese enrollment nationally declined 4 percent in 2024–25, making a more specific shift in the composition of Chinatown’s customer market plausible but not yet established.
- Several other pressures raised by businesses have support in the broader data, but their Chinatown-specific effects remain uncertain. E-commerce sales grew 9.8 percent year-over-year in early 2026, compared with 3.9 percent for total retail sales, consistent with respondents’ concerns about online competition. Parking costs in Center City also rose in 2025, followed by a Chinatown-specific discounted-parking program in 2026. By contrast, citywide retail theft and unsheltered homelessness both declined in 2026, underscoring the importance of distinguishing businesses’ localized experiences from broader citywide trends.
Economy League of Greater Philadelphia survey of Philadelphia small businesses, March–August 2026 (n=34). Demand percentages use the 31 respondents able to name a direction of change.
Costs have risen across almost the entire sample
Ninety-seven percent of businesses reported that their operating costs had increased. About 59 percent described the increase as moderate, while 38 percent reported substantial increases. Among Chinatown businesses, 100 percent reported higher costs.
Respondents identified pressure across multiple parts of their operating models, including food and raw materials, inventory, merchandise, wages, supplies, delivery, rent, utilities, taxes, and imported goods.
This matters because the firms represented in the survey have relatively little scale over which to spread those increases. Sixty-eight percent employ only one to four people, while 91 percent employ fewer than 10. Many are also established businesses: 68 percent have operated for at least six years, and 47 percent for more than a decade.
For restaurants, the pressures are often recurring rather than one-time. One respondent explained:
“Every week it feels like flour, butter, eggs, or milk goes up again.”
Restaurant, Chinatown
Retailers pointed to inventory, shipping, and imported merchandise. Other businesses identified labor as an increasingly important expense.
What the secondary data say
Regional economic data broadly corroborate the survey. The Philadelphia-Camden-Wilmington Consumer Price Index was 5.4 percent higher in June 2026 than a year earlier, compared with 3.3 percent year-over-year inflation in June 2025. Food prices rose 4.2 percent, while food purchased for home consumption increased 5.2 percent. Fruits and vegetables increased 9 percent, while restaurant prices increased by a more moderate 2.6 percent.
Federal trade policy provides another potential cost channel. Changes beginning in 2025 ended duty-free de minimis treatment for qualifying low-value shipments from China, increasing potential costs for firms relying on some imported merchandise or equipment. The survey does not contain the product- and shipment-level information required to quantify that exposure for individual businesses.
Taken together, however, the secondary evidence strongly supports the survey’s central cost finding: the increase in operating expenses reported by businesses is consistent with broader movements in prices, wages, and some import costs.
Demand has not kept pace with rising costs
Among businesses able to identify a direction of change, 48 percent reported declining demand, 35 percent reported no change, and only 16 percent reported an increase. In other words, 84 percent said customer demand was either stagnant or declining.
The pattern is more pronounced in Chinatown. Among Chinatown respondents able to assess demand, 56 percent reported a decline, 40 percent reported no change, and just 4 percent reported growth. Taken together, 96 percent reported demand that was flat or falling.
It is the interaction between demand and costs, however, that provides the clearest measure of the pressure businesses are experiencing. Across the full survey, 76 percent were facing higher costs while demand was unchanged or declining. Among Chinatown respondents, the share was 92 percent.
This combination is economically important because it limits the range of available adjustments. Businesses can often manage higher expenses when sales are also increasing. Similarly, weaker demand may be easier to absorb when costs remain stable. When the two occur simultaneously, businesses must rely more heavily on pricing, cost reductions, lower margins, or delayed investment.
Respondents also suggest that demand weakness may take more than one form. Some reported fewer customers. Others described customers becoming more cautious about how much they spend when they do visit. One retailer pointed to weaker purchasing power for non-essential purchases, while a restaurant described customers purchasing less food per visit.
The distinction matters. A commercial corridor may retain pedestrian traffic while individual businesses experience lower transaction values.
What the secondary data say
The broader downtown evidence does not point to a generalized collapse in activity.
| Indicator | Most recent reading | Direction |
|---|---|---|
| Center City retail occupancy | 84% in 2026 — a seven-year high | Improving |
| Center City pedestrian volume | More than 343,000 on a typical day | Resilient |
| Pennsylvania Convention Center | More than 900,000 attendees in 2025 | Resilient |
| SEPTA ridership, June 2026 | 3.5% above a year earlier; bus up 7% | Improving |
| Chinatown businesses: customer demand | 96% flat or declining; 4% growing | Weak |
Sources: Center City District, State of Center City 2026; SEPTA, Ridership: June 2026; Economy League survey, 2026.
These indicators do not measure Chinatown business revenue directly. But they make a broad downtown contraction an insufficient explanation for the weakness reported in the survey.
Several alternatives remain possible. Chinatown may be capturing a smaller share of downtown visitation. Its traditional customer groups may be changing. Customers may still be visiting but spending less. Or accessibility, competition, and other corridor-specific conditions may be affecting the conversion of visitors into sales.
At present, direct Chinatown foot-traffic and transaction data are not available to distinguish among these explanations.
Businesses are adjusting prices — but mostly at the margin
Higher prices are one way businesses can respond to rising expenses. Among businesses for which the question applied, 67 percent reported increasing prices. Of those that raised prices, approximately 73 percent described the increase as slight, 23 percent as moderate, and fewer than 5 percent as significant.
Within Chinatown, 58 percent reported increasing prices, and none described the increase as significant.
Several respondents also described reluctance to increase prices further because their customers were themselves under financial pressure. One restaurant put the tradeoff this way:
“We try not to raise prices because our customers are mostly regulars and hardworking laborers, but our margins just keep getting squeezed.”
Restaurant, Chinatown
The survey did not collect financial statements, so it cannot directly establish whether profit margins have declined. But the pattern is consistent with firms having limited ability to pass higher costs through fully: operating expenses are rising nearly everywhere, demand is rarely increasing, and most price changes have been modest.
What the secondary data say
The regional price data provide useful context but not a direct measure of margins. In June 2026, food-at-home prices were 5.2 percent higher than a year earlier, while food-away-from-home prices had increased 2.6 percent.
Those categories are not equivalent to restaurant input and menu prices, but they illustrate how input-related and consumer-facing prices can move at different rates. The appropriate conclusion is therefore limited: the survey is consistent with pressure on business margins, but does not directly measure it.
Employment has remained comparatively stable
The staffing results are notably less negative than those for costs and demand. Ninety-one percent of businesses reported that their overall staffing situation was broadly unchanged, while only 9 percent described staffing conditions as somewhat worse. A relatively small share reported reduced staffing, difficulty filling open positions, or employee-eligibility concerns.
Source: Economy League survey, 2026. The detailed staffing question was answered by 32 businesses.
The survey therefore provides little evidence of widespread job loss. That does not necessarily imply business expansion.
Some respondents said weak customer demand reduced the need to hire. Others relied substantially on family labor. A smaller number reported difficulty recruiting workers with the appropriate combination of occupational and language skills. One respondent explained:
“We don’t have enough consumers. So the staffing is stable. Most of our staff are family members.”
Restaurant, Chinatown
The more precise interpretation is therefore that businesses have generally maintained their existing staffing levels, rather than that employment is expanding.
What the secondary data say
Regional wage data are consistent with continued labor-cost pressure in food service, retail, and personal-service occupations.
The more specific question raised by several respondents—whether Mandarin-, Cantonese-, or other bilingual workers with relevant occupational skills are unusually difficult to recruit—cannot currently be answered from standard public datasets.
Philadelphia has a substantial immigrant and Asian population. Approximately 15.2 percent of Philadelphia residents are foreign-born, while the city’s Asian American, Native Hawaiian, and Pacific Islander population grew by about 38 percent between 2010 and 2020. But those figures do not indicate how many workers possess the language, occupation, scheduling, and work-authorization characteristics particular employers require. That remains a question for more targeted labor-market research.
Chinatown businesses are closely connected to an immigrant customer market
The survey also makes clear that immigrant consumers are central to many participating businesses.
Across the full sample, 85 percent of businesses estimated that foreign-born customers accounted for roughly 36 percent or more of their clientele. The concentration is higher in Chinatown: 92 percent estimated that foreign-born consumers represented roughly half or more of their customer base.
Several businesses reported perceiving fewer Chinese international students in Chinatown. Others mentioned immigration enforcement or changes in immigrant customer activity. These responses identify potential mechanisms. They do not establish their size or causal effect.
The geography of Chinatown’s customer market may also be changing
Several respondents described Chinese households and businesses becoming more geographically dispersed, particularly toward Northeast Philadelphia and the surrounding region. If so, that would change the competitive environment facing Chinatown.
Customers who once needed to travel to the neighborhood for specialized restaurants, groceries, or services may increasingly have alternatives closer to home. That does not necessarily imply less regional demand for Chinese businesses. It may instead imply that the demand is distributed differently.
What the secondary data say
Philadelphia’s Asian population has grown substantially, increasing by approximately 38 percent between 2010 and 2020, and Chinese-serving community institutions are active in Northeast Philadelphia.
The available evidence does not, however, establish that Chinatown’s existing customer base specifically relocated to Northeast Philadelphia. Population growth elsewhere may reflect new immigration, relocation within the region, or both.
The survey therefore raises an important but still untested hypothesis: Chinese commercial demand may be becoming more geographically decentralized. A tract-level analysis of Chinese population, language, and business locations over time would be needed to evaluate it.
Online competition is a more clearly documented structural shift
Several businesses—particularly retailers—identified e-commerce as an increasing source of competition. For some, online shopping replaces an individual customer visit. For others, business-to-business purchasing has also shifted, with restaurants and other firms increasingly able to buy supplies through online wholesalers.
One respondent said:
“A lot of people assume shopping online is always cheaper, but if they came into our store, they’d see many of our items actually cost less. We just need more people to know we’re here.”
Retailer, Chinatown
What the secondary data say
Here, the national evidence aligns clearly with respondent concerns.
Source: U.S. Census Bureau, Quarterly Retail E-Commerce Sales, first quarter 2026.
These figures do not tell us how much revenue individual Chinatown retailers may have lost to online sellers. They do establish that the businesses are operating within a retail market in which online purchasing continues to gain share.
A useful next step would be to examine the digital presence of participating firms—including websites, Google profiles, online ordering, delivery platforms, and social media—to determine whether some businesses are better positioned than others to compete in that environment.
Neighborhood conditions matter, but local experience and citywide trends are not the same
Respondents also identified parking, shoplifting, cleanliness, homelessness, and customer comfort as factors affecting their businesses. These concerns can have direct economic effects. Security measures add costs. Public-realm conditions can influence customers’ willingness to visit or how long they stay. Parking can affect the convenience of a trip, particularly for customers traveling from other parts of the region. The survey records those business experiences. It does not establish whether the underlying conditions have worsened across Philadelphia—or even across Chinatown as a whole.
What the secondary data say
Citywide indicators provide an important counterpoint.
Those trends do not invalidate respondents’ experiences. A retailer can experience repeated theft while retail theft falls citywide; a particular block can have sanitation or customer-access issues while aggregate conditions improve.
They do mean that localized business conditions should not be treated as evidence of worsening citywide trends without more geographically specific data.
Parking provides a somewhat clearer example of a measurable access change. Center City meter rates increased by $1 per hour in July 2025. In February 2026, the Philadelphia Parking Authority and Philadelphia Chinatown Development Corporation subsequently introduced a Chinatown-specific program offering customers up to three hours of parking for $5 at the Fashion District garage.
The existence of that program suggests that parking affordability has been recognized as a customer-access issue. Its effect on business demand has not yet been measured.
Businesses are adjusting rather than contracting sharply
The operational responses are consistent with the broader picture of cautious adaptation.
Approximately 44 percent reported making no major operational changes. About 32 percent mentioned adjusting prices, while roughly 15 percent changed staffing levels or schedules and 15 percent paused expansion or investment. A smaller share reported reducing hours or services, while others adjusted inventory, marketing, or opening hours.
The pricing share in this open-ended question is lower than the 67 percent who reported price increases when asked directly about pricing, illustrating the difference between prompted and unprompted responses.
The broader pattern is more important than any individual adjustment. Most respondents are not reporting large-scale contraction. Instead, they describe incremental decisions intended to manage costs or preserve cash flow.
This is also reflected in business confidence. Thirty-two percent are confident or very confident about their outlook, 47 percent are neutral, and 21 percent are unconfident or very unconfident. Among Chinatown respondents, 27 percent are confident, 50 percent are neutral, and 23 percent are unconfident.
What the secondary data say
Philadelphia already operates a substantial portfolio of small-business support programs. By 2026, the Storefront Improvement Program had supported more than 1,000 businesses, with $8.57 million in grants supporting more than $26 million in projects. The City and PIDC also provide forgivable financing, security-camera reimbursements, growth capital, and conventional business loans.
This suggests that the policy question may be less about whether business assistance exists and more about which intervention matches which constraint. A business with strong demand but insufficient financing may benefit from capital. A business facing higher costs and weak demand may require a different mix of interventions.
There is some evidence that customer-generation strategies can affect commercial outcomes. Center City District reported that businesses participating in Open Streets experienced 62 percent higher foot traffic and 38 percent higher sales on programmed days. Those results cannot be assumed to transfer directly to Chinatown, but they demonstrate that commercial-district programming can influence customer activity and sales.
Read the full report, Holding On, With Less Room to Maneuver, for the complete survey findings, methodology, secondary research, and recommendations.
What comes next
The Economy League intends to repeat the survey over time across more locations. The goal is to understand patterns in terms of how businesses across the city are performing in the face of changing policies and larger economic conditions.
About the Survey
The survey was conducted between March and August 2026 as part of an ongoing Economy League effort to understand how small businesses are navigating changes in economic conditions and the policy environment.
Source: Economy League survey, 2026.
The original dataset contained 35 submissions. After removing one duplicate response, the analytic sample includes 34 unique businesses, of which 26 are confirmed Chinatown businesses.
Businesses were recruited primarily through convenience and snowball sampling, with outreach concentrated in Chinatown and South Philadelphia alongside responses from elsewhere in the city.
The survey combines structured questions on operating costs, customer demand, pricing, staffing, workforce conditions, customer characteristics, operational adjustments, and business confidence with open-ended questions about the factors businesses believe are affecting their operations.
Because the sample is non-random, the findings should not be interpreted as statistically representative estimates for all Philadelphia or Chinatown businesses. Instead, they provide a descriptive account of conditions reported by participating businesses and identify questions for continued research.
Endnotes
- U.S. Bureau of Labor Statistics, Consumer Price Index, Philadelphia-Camden-Wilmington — June 2026.
- U.S. Bureau of Labor Statistics, Occupational Employment and Wages in Philadelphia-Camden-Wilmington — May 2025.
- White House and U.S. Trade Representative materials on changes to de minimis treatment and China-related tariffs.
- Center City District, State of Center City 2026.
- SEPTA, Ridership: June 2026.
- Institute of International Education, Open Doors 2025.
- U.S. Census Bureau, Quarterly Retail E-Commerce Sales, First Quarter 2026.
- Philadelphia Police Department, 2026 crime statistics.
- City of Philadelphia Office of Homeless Services, 2026 Point-in-Time Count.
- Philadelphia Parking Authority, Center City meter-rate changes and Chinatown Visitor Discount Parking Program.
- City of Philadelphia Department of Commerce and PIDC small-business program materials.
