Big City Diner is shutting down its Windward Mall location at the end of October after 11 years in Kaneohe, the latest sign of mounting financial pressure on Oahu's restaurant industry. The eatery will remain open through October 31, with some staff transferring to its other locations, while the family-style chain continues operating at three other spots across Oahu.
Big City Diner president Lane Muraoka pointed to a mix of factors squeezing the business, according to KHON2. He cited lower tourism spending, rising insurance costs, minimum-wage increases and utility hikes all compounding at once. “Tourism is down, the dollars come in, and it doesn't circulate throughout a community,” Muraoka said. He also noted the diner could potentially return to Kaneohe if another opportunity arises down the road.
The Windward Mall closure isn't an isolated case. Pacific Business News reports that Maruki Tei, a Hawaii presence since 1958, is also closing for good, and that Big City Diner will continue at three other Oahu locations once Windward Mall shuts its doors. Separately, the Hawaii Restaurant Association has confirmed that two other restaurants have closed recently, though their names were not disclosed.
Shipping Costs Hammer Small Operators
The squeeze isn't limited to sit-down chains. Felix Koeppenkastrop-Deittert of Il Gelato Hawaii, a small family-run and operated business, said shipping costs have risen 80% over the last five years, a jump that has significantly affected the company's bottom line. Still, he said raising prices remains the last resort after exhausting other options. “Increasing prices is always the last resort,” he said, after the business sought greater efficiency and savings elsewhere first.
Mike Palmer described a similarly rough stretch at Kuhio Avenue Food Hall, saying this shoulder season has been exceptionally soft and significantly down. Sheryl Matsuoka, president and CEO of the Hawaii Restaurant Association, said operators are responding by adopting self-ordering kiosks, shortening hours and offering specials during off-peak times rather than immediately raising menu prices.
Wages, Tariffs and Shrinking Margins
The cost pressures are showing up in the numbers. The typical profit margin for Hawaii restaurants fell from 10% to less than 2% in the first quarter of 2026, according to Hawaii Business Magazine. Hawaii's minimum wage rose to $16 an hour at the start of 2026 and is scheduled to climb to $18 an hour by the beginning of 2028, per the Hawaii Department of Labor and Industrial Relations. The earlier jump from $14 to $16 an hour alone drove more than a 14% increase in average labor costs for the industry, the magazine's report notes.
Rising tariffs have piled on as much as 15% in added product costs over the past two years, the same outlet reported, citing the Hawaii Restaurant Association. Meanwhile, a forecast from the University of Hawaii Economic Research Organization projects statewide visitor arrivals will dip just over half a percent in 2026, with real visitor spending expected to fall nearly 2%, according to KHON2's separate coverage of tourism trends.
Restaurants Rethink Hours, Kitchens and Seating
Other Oahu restaurants have been experimenting with leaner operations to avoid passing costs directly to customers. Hawaii News Now reported that Westman Cafe in Kakaako deliberately designed a smaller kitchen to free up space for more tables as part of its cost-control strategy. The outlet's report described owners across the island rethinking how they operate while trying to avoid raising prices.
Elsewhere, many restaurants in the islands have shifted toward a takeout-focused model, with some choosing to close indoor seating entirely rather than cut operating hours, according to KITV. The strategies reflect an industry trying to stay afloat without alienating price-sensitive local customers and visitors alike.
A Wave of Closures Across the Island
Big City Diner's departure from Windward Mall adds to a growing list of Oahu closures chronicled this year by Honolulu Magazine, including Jesse's Coffee Shop & Restaurant in Kalihi, Hong Yeon in Moiliili, Cat Café Moff's Pearlridge location, and Choi's Garden. Rising food costs, labor shortages and lease challenges forced dozens of Hawaii restaurants to close their doors in 2025, according to a separate Pacific Business News report, suggesting the pressure isn't new, just intensifying.
Longtime favorites have fallen before, too. Haili's Hawaiian Food, started in 1950 by owner Lorraine Haili Alo's parents, closed after more than 70 years when its lease ran out, KITV reported. For now, Big City Diner says its remaining three Oahu locations will stay open, even as the broader industry keeps searching for ways to trim costs without driving customers away.
