Holding On, With Less
Room to Maneuver

A commercial ecosystem built on very small businesses

The businesses represented in this study are overwhelmingly small. Of the 34 unique businesses surveyed, 23 — 68 percent — employ just one to four people; another eight, or 24 percent, employ five to nine; only three employ 10 to 24; and none employs 25 or more. Altogether, 31 of 34 businesses — 91 percent — have fewer than 10 employees. The Chinatown subset looks much the same: 24 of the 26 confirmed Chinatown businesses — 92 percent — employ fewer than 10 people.

Restaurants and food-service establishments make up the largest group across the full survey, accounting for 20 of the 34 businesses. Ten are non-food retailers, three provide personal services, and one is a specialty grocery and Chinese-medicine business.

Just as important as their size is their longevity. Twenty-three businesses — 68 percent of the full sample — have operated for at least six years. Sixteen, or 47 percent, have been in business for more than a decade, including eight that have operated for at least 21 years. The Chinatown businesses are particularly established: 21 of the 26 have operated for at least six years, and 15 for more than a decade.

These figures place the survey findings in context. A weakening customer base or difficulty absorbing expenses among a long-established business is different from the volatility expected during a firm’s first years. Many of these establishments have already demonstrated an ability to survive considerable economic change.

This is a reminder that small-business vulnerability is not synonymous with imminent closure. A business may remain open while its customer base gradually narrows, its owners invest less, and its ability to adapt diminishes.

The central pressure: costs are rising faster than opportunity

Businesses identified pressures across multiple parts of the operating model. Cost of goods and raw materials were among the most frequently identified, with smaller numbers citing inventory, labor, supplies, delivery, rent, utilities, taxes, and import-related expenses. The breadth of those responses matters. Businesses are not describing a single commodity shock that can easily be managed or substituted away. They are describing increases across several expenses at once.

Higher wages, in this case, are not simply an expense to be minimized. They are part of the cost of retaining workers with skills the business considers difficult to replace.

INDEPENDENT EVIDENCE

Price data strongly support the survey’s cost finding. In June 2026, the Philadelphia–Camden–Wilmington Consumer Price Index was 5.4 percent above June 2025, compared with 3.3 percent year-over-year inflation a year earlier. Prices for food away from home increased a more moderate 2.6 percent — which is precisely the constraint restaurant respondents describe, with input costs climbing faster than menu prices.^[5]

Labor costs moved upward as well. For firms with only a handful of workers, even modest wage increases can materially affect the cost structure without showing up as a change in headcount.^[6]

Trade policy created an additional potential cost channel for businesses dependent on imported merchandise. Duty-free de minimis treatment for qualifying low-value shipments from China ended in May 2025, while tariff treatment for Chinese imports continued to change thereafter.^[7]

Rising costs are colliding with a weaker customer market

Higher expenses become substantially more difficult to manage when businesses cannot rely on growing sales. Among the 31 respondents able to identify a direction of change in customer demand, 15 — 48 percent — said demand had declined, 11 said it was unchanged, and just five reported an increase. Three additional respondents were unsure or found it difficult to assess.

The Chinatown results are more stark. Of the 25 Chinatown businesses able to give a directional response, 14 reported declining demand, 10 reported no change, and only one reported an increase. In other words, 24 of 25 Chinatown respondents able to assess the direction of demand said it was flat or declining.

The narratives indicate that weaker demand has at least two dimensions. The first is fewer customers: respondents described fewer international students, customers relocating to other parts of the region, parking difficulties, online competition, fewer restaurant owners purchasing from suppliers, and customers avoiding the area at particular times. The second is less purchasing power among the customers who remain. A long-established restaurant described customers economizing even on relatively inexpensive meals, including families increasingly sharing food rather than purchasing separately. Another retailer attributed weaker sales to customers having less disposable income for non-essential purchases.

These accounts suggest a problem that foot-traffic measures alone may fail to capture. A customer may still enter a business but spend less once there.

The pressure then moves back onto the business. Raising prices may protect margins, but it can further suppress demand among price-sensitive customers. Holding prices down protects customers but transfers more of the burden onto the owner. Twenty-two of the 33 businesses for which the question was applicable reported raising prices. Sixteen characterized their increase as slight and five as moderate; only one described a significant increase.

For many businesses, therefore, the data suggest limited pricing power rather than unrestricted cost pass-through. The survey does not collect financial statements, so it cannot directly measure changes in profit margins. But the combination of nearly universal cost increases, limited demand growth, generally modest price increases, and respondents’ descriptions of absorbing costs is consistent with growing pressure on margins.

INDEPENDENT EVIDENCE

The strongest available external evidence complicates the demand story rather than simply validating it. Downtown Philadelphia is not, on the public measures, in retreat.^[8][9]

Those figures do not disprove the survey. They make it more consequential. If downtown visitation and retail occupancy are comparatively strong while 24 of 25 Chinatown businesses able to assess demand report flat or declining demand, then the problem may be more corridor-specific: Chinatown may be capturing a smaller share of downtown visitors; its traditional customer groups may be changing; or people may still visit but spend less once there.

Stable employment masks a more constrained labor market

At first glance, staffing is the least alarming indicator in the survey. Thirty-one of 34 businesses — 91 percent — reported that staffing conditions were approximately the same. Only three characterized conditions as somewhat worse. Asked more specifically about staffing changes, 27 of the 32 businesses answering the question reported no significant change. One business had reduced staffing, while four responses identified difficulty filling positions or employee-eligibility concerns.

It would therefore be inaccurate to characterize the survey as evidence of widespread layoffs. But stable headcounts should not automatically be interpreted as business strength. Some respondents indicated that staffing remained unchanged because customer demand did not justify expansion.

Another reported operating with one fewer employee because there were not enough customers. Other businesses confront the opposite problem: they would like workers but struggle to find candidates with the required combination of language skills and work authorization.

These responses suggest that the headline employment number obscures several different conditions: businesses maintaining existing employment; businesses relying on family labor; positions that are difficult to fill; and firms whose weak demand limits the need for additional hiring. The more appropriate interpretation is therefore not that employment is growing, but that businesses are largely protecting existing staffing levels while their capacity or willingness to expand remains constrained.

INDEPENDENT EVIDENCE

The external labor-market evidence is consistent with a constrained, rather than collapsing, staffing environment. Wages continued to rise in food-service, sales, and personal-care occupations between 2024 and 2025.^[10] Philadelphia also has a substantial immigrant labor pool: the 2020–2024 American Community Survey estimates 15.2 percent of city residents are foreign-born, while City demographic work shows the Asian American, Native Hawaiian, and Pacific Islander population increasing from 97,149 in 2010 to 134,485 in 2020, a 38 percent rise.^[11][12]

Immigration matters through the customer base as much as the workforce

The businesses in this survey are deeply embedded in an immigrant and multilingual economy. Across the full sample, 29 of 34 businesses — 85 percent — estimated that foreign-born customers made up roughly 36 percent or more of their clientele. Twenty-one said foreign-born customers constituted about half of their customer base, while another eight estimated they constituted most of it. Within Chinatown the connection is stronger still: 24 of the 26 businesses estimated that foreign-born customers constituted roughly half or more of their clientele.

This is not an isolated ethnic marketplace. It is a multilingual commercial ecosystem whose businesses depend on the movement, settlement, employment, and purchasing power of immigrant communities. That helps explain why immigration-related changes appear repeatedly in respondents’ descriptions of both demand and workforce conditions.

These are respondents’ assessments rather than causal estimates, and they should be treated accordingly. The survey cannot establish how much of the change in customer demand is attributable to immigration policy, enforcement, international enrollment, the broader economy, or other factors. But the mechanism is important enough to investigate: when a commercial district relies heavily on immigrant residents, workers, and students, changes affecting those populations can become changes in local business revenue.

The workforce evidence is more nuanced. The survey does not show widespread loss of existing employees because of work-authorization changes. Among the 23 businesses that answered the relevant question, 18 reported no such loss; one reported a loss, one was unsure, and three preferred not to say. Eleven businesses did not answer. Those missing responses are concentrated in earlier collection waves, so nonresponse should not be interpreted as evidence that no such losses occurred.

The more persistent issue in the narratives is labor availability. That distinction matters. The immigration-related economic exposure identified here appears to operate through several channels at once — customer demand, international-student flows, recruitment, employee availability, and perceptions of enforcement — rather than primarily through widespread loss of existing workers.

INDEPENDENT EVIDENCE

The international-student evidence requires a narrower interpretation than several respondents offered. Nationally, U.S. international enrollment increased 5 percent to 1,177,766 students in 2024–25, but enrollment from China fell 4 percent to 265,919, while new international enrollment declined 7 percent. Institutions contributing preliminary fall 2025 data to Open Doors then reported a 17 percent decline in new international enrollment.^[13] Philadelphia institutions, however, do not show a simple across-the-board contraction.^[14][15][16]

Sources: Institute of International Education, Open Doors 2025; Temple University; Penn Global; Drexel University. Drexel’s five largest represented countries at that level are India, Vietnam, Pakistan, Kazakhstan, and Turkey — not China.

The evidence therefore does not support the broad claim that Philadelphia simply has fewer international students. It does make a narrower mechanism plausible: the composition and flow of international students may have changed, particularly the Chinese student segment that some Chinatown businesses identify as a historically important customer group.

Federal immigration enforcement also became more salient after 2024. ICE’s latest fully documented annual report records 113,431 administrative arrests in FY2024, with subsequent policy expanding enforcement activity and partnerships.^[17] That establishes a changed national enforcement environment, but it does not quantify its effect on Chinatown customer traffic or employment.

Chinatown’s customer geography may be changing

Several respondents describe a longer-term transformation that goes beyond the immediate economic cycle. Chinese and other immigrant households do not necessarily live where they once did. Businesses and services catering to those communities have followed them into other parts of Philadelphia and the region. For customers who once traveled to Chinatown for goods, food, services, and social connections that were difficult to find elsewhere, alternatives may now be closer to home.

The respondent also cited the difficulty of parking in Chinatown, illustrating how demographic change and accessibility can reinforce one another. If comparable products and restaurants are now available nearer to where customers live, even relatively modest barriers to visiting Chinatown can matter more.

Another business explained that its own customer base consisted largely of Chinatown restaurant owners. With fewer restaurants, it was seeing fewer customers — and those customers had become more comfortable ordering online. This points toward an important economic-development concept: commercial ecosystems can weaken through feedback effects.

Understanding Chinatown’s economic health therefore requires looking beyond individual establishments. It requires understanding the network of businesses, workers, residents, students, customers, institutions, and visitors that collectively create demand for the district.

INDEPENDENT EVIDENCE

The broader demographic evidence is consistent with a larger and more geographically dispersed Asian population, but it does not yet prove the specific relocation story respondents describe. Philadelphia’s Asian American, Native Hawaiian, and Pacific Islander population increased 38 percent between 2010 and 2020.^[18] City sources also document active Chinese community institutions in Northeast Philadelphia, including organizations serving non-English-speaking Chinese residents.^[19]

Neighborhood conditions have become business conditions

Parking, safety, shoplifting, cleanliness, homelessness, and the condition of sidewalks appear repeatedly in the responses. These concerns can easily be categorized as quality-of-life issues and separated from an economic-development discussion. The survey suggests that would be a mistake. For businesses, neighborhood conditions translate into both costs and demand.

Other concerns operate through customer experience.

These accounts should be interpreted carefully. They reflect business perceptions and experiences rather than independent measures of crime, homelessness, or sanitation conditions. But perceptions themselves can have economic consequences when they affect operating decisions or whether customers choose to visit.

Parking presents a similar issue. Respondents repeatedly referenced its cost or availability, sometimes explicitly linking it to lost customers. For a destination commercial district competing not only with other neighborhoods but with online shopping and commercial areas closer to where customers live, friction matters.

INDEPENDENT EVIDENCE

Official citywide indicators provide an important corrective to the perception that crime and homelessness are broadly worsening.^[20][21]

Those improvements do not invalidate what an individual business experiences. A retailer can suffer repeated theft while citywide theft falls; a restaurant can confront an obstructed entrance or sanitation problem while the citywide unsheltered count declines. The implication is narrower: the report should describe business experiences and perceptions without using them as evidence of worsening citywide conditions.

Parking is a more directly measurable friction. In July 2025, the Philadelphia Parking Authority increased Center City Core meter rates from $3 to $4 per hour and broader Center City rates from $2.50 to $3.50.^[22] In February 2026, PPA and the Philadelphia Chinatown Development Corporation introduced a Chinatown-specific program offering customers of participating businesses up to three hours of parking for $5 at the Fashion District garage.^[23] The targeted program indicates that parking affordability has been recognized institutionally as a customer-access issue; it does not establish how large the effect on sales is.

Competition is changing, both online and on the street

Businesses also described a more competitive retail environment. For some, the primary threat is e-commerce.

Another business said its restaurant-owner customers had become increasingly accustomed to buying supplies online. Other respondents raised competition from businesses or vendors operating with different cost structures.

These comments point toward a broader transformation confronting legacy commercial districts. Businesses no longer compete solely with the storefront down the street. They compete with online marketplaces, businesses closer to customers’ homes, newer establishments with different branding, and sellers with substantially different overhead structures. For older businesses especially, competitiveness increasingly depends not just on price or product but on visibility, digital presence, customer acquisition, and the ability to attract a new generation of consumers.

INDEPENDENT EVIDENCE

National retail data strongly support the structural part of this concern.^[24]

Source: U.S. Census Bureau, Quarterly Retail E-Commerce Sales, first quarter 2026. E-commerce grew at roughly two and a half times the rate of retail overall.

That trend creates at least two competitive channels for Chinatown businesses: consumers can substitute online for specialty retail purchases, while restaurant and other business customers can shift procurement to online wholesalers.

Businesses are adapting — but much of the adaptation is defensive

The survey does not depict passive businesses waiting for conditions to improve. When asked broadly about operational changes, 11 businesses named pricing adjustments. Five changed staffing levels or schedules. Five paused expansion or investment. Two reduced hours or services. Others extended hours, slowed stocking, or increased marketing. Fifteen reported no major operational changes.

These figures come from an open-ended operational-adjustment question and should not be confused with the direct pricing question discussed earlier, where 22 businesses reported having raised prices. Respondents answering an open-ended question did not necessarily list every change they had made.

Taken together, however, the responses reveal an important distinction between adaptation for growth and adaptation for survival. Raising prices to cover food costs, slowing inventory purchases, reducing services, changing schedules, and postponing investment may improve near-term cash flow. But they do not necessarily leave a business stronger.

Pausing investment is particularly consequential. Five businesses may appear modest in a sample of 34, but for a neighborhood commercial ecosystem the effects can compound. Deferred renovations, equipment, expansion, hiring, technology, or new locations are investments that would otherwise generate economic activity and improve long-term competitiveness. This is why business resilience should not be measured only by whether establishments have closed. A business can remain open while progressively losing the financial room to innovate, hire, maintain its space, invest in new equipment, or transition to a younger generation.

The outlook is cautious, not catastrophic

Business confidence provides another reason to resist overly dramatic conclusions. Of the 34 unique businesses surveyed, 11 were confident or very confident, 16 were neutral, and seven were unconfident or very unconfident. Nearly half therefore occupy the middle. Among Chinatown businesses the pattern is somewhat more cautious: seven of 26 were confident or very confident, 13 were neutral, and six were unconfident or very unconfident.

That is consistent with the broader picture emerging from the survey. These businesses are neither uniformly booming nor uniformly anticipating closure. Instead, many appear to be waiting: watching expenses, protecting customers, maintaining staffing, and limiting risk.

The prevalence of neutral outlooks may itself be meaningful. When combined with near-universal cost increases and widespread demand weakness, it suggests an environment in which firms are cautious about what comes next.

The economic-development challenge is therefore partly preventative. Interventions made only after vacancy, layoffs, or closure appear may come too late. The survey points toward an earlier stage of vulnerability, when businesses remain operational but the buffers that allow them to withstand future shocks are becoming thinner.