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Flagstaff’s Downtown Diner may be closing its doors for good. Since 1989, the restaurant has been a beloved community fixture, but times have changed, said owner and operator Nancy Tracy.

“I just can't physically do it anymore,� said Tracy, who has operated the diner with her brother since 2000. Before that, it belonged to her sister and brother-in-law.

To Tracy, Downtown Diner has become something of a family heirloom, and she cherished the restaurant as a hands-on owner for over two decades.

“It seems to me that the best businesses are the ones who have owners that are in there all the time,� she said.

She recalled fondly the “wonderful� employees she’s worked alongside over the years. Some still send her Christmas cards, she said.

“The diner was fabulous when I was in there all the time,� she said.

But in recent years, Tracy has had to take a step back due to health issues. In her absence, good help has been hard to find. While she’s always employed college students, she’s found that her turnover rates have increased, and she’s had trouble retaining quality employees at a sustainable rate.

The problem is the disparity between wages and cost of housing in Flagstaff, Tracy said. Despite her accommodations of Flagstaff’s minimum wage increase, she recognized that she is still unable to pay employees at a rate commensurate with the cost of living and housing in town.

The result is that her employees are often people who “don’t need the money� � students whose living expenses are being paid through loans or family assistance.

They don’t seem to care about the job because “they just need to make their spending money,� she said.

There could be some truth to this, said Nancy Baca, senior lecturer at Northern Arizona University's W.A Franke College of Business.

“Anybody who needs the money has to make more than $15 an hour, because you can’t actually live on $15 an hour,� Baca said.

Recognizing this, Baca believes Flagstaff’s minimum wage increase contributed to a rising cost of living and exacerbated existing economic imbalances.

“Flagstaff is just a different animal in that we have a college town, a tourist destination, a second home location, and on top of all that we had this minimum wage spike,� Baca said.

Consequently, there’s immense pressure put on longtime business who have tried to keep the price of goods and services fairly level.

For business owners, increasing prices is “the only thing you can do,� Baca said.

The struggle to keep good employees might be more than a rote economic problem, said Fred DeMicco, a professor in NAU’s School of Hotel and Restaurant Management. Even as the hospitality business starts to rebound from the COVID-19 pandemic, “revenue lost during the pandemic can never be recovered, and the hospitality industry cannot find enough workers post-COVID� DeMicco said.

Aside from the more than one million Americans who have died during the pandemic, another 3.5 million workers have left the U.S. workforce since March 2020, with about 1.2 million leaving the hospitality industry, thus creating huge challenges for hospitality businesses, DeMicco said.

“Evidence suggests many of these are leaving our hospitality industry for good,� he said.

Reasons behind the exodus from hospitality jobs include the shifting values around work-life balance.

“Research shows that the average Generation Y worker is uninterested in a job for life. Instead, they are seeking flexibility and work-life balance,� DeMicco reported.

Tracy’s experience corroborates this perspective.

“When I was younger, longevity at a job meant something,� she said. “Now it doesn't mean anything.�

Anytime a restaurant closes, you have to look at the ownership as well, said Allen Reich, professor in NAU’s School of Hotel and Restaurant Management. Tracy’s recent inability to be hands-on at Downtown Diner likely had a deleterious effect on the quality of operation, he said.

“If the owner is putting less effort and less time in at the unit, that automatically tells me that there's probably less training going on, less supervision of that training and less supervision of the employees,� Reich said, adding that inconsistent training and supervision could result in inconsistent quality and a less valuable experience for employees hoping to gain skills and progress through the hospitality industry.

Tracy is more than ready to accept that responsibility.

“It all does boil down to me as the owner,� she said.

The unfortunate truth is that her health has prevented her from giving the same amount of energy to the family business. That reality is heartbreaking for her.

It’s a blow to the community as well.

Downtown Diner is “a Flagstaff institution,� said Alexander Ballesteros, who remembers frequenting its booths with friends in high school. For Chelsea Du Pont, who worked at Downtown Diner in the early 2000s, the restaurant was what started her “love affair with downtown’s atmosphere.� It’s a business that that touched many lives, Du Pont said. “There are very few people who don’t have a ‘Diner� story.�

Despite its impending closure, Downtown Diner was kind enough to donate merchandise to a recent fundraising gala for the Flagstaff Auto Museum.

Since word about the Downtown Diner’s closure started to spread, Tracy said she’s been inundated with similar affirmations of support.

“There was quite an outreach,� she said.

Accordingly, Tracy has been hard at work trying to find a successor who may be able to keep the restaurant open. Given its location, with the right changes there’s good potential for Downtown Diner to surge again into a thriving restaurant, Reich evaluated.

Tracy seems to recognize that, too, and hopes that the 33-year-old business might find new life within the family.

“We're just trying to see if anybody in the family wants to try to take it,� she said. “I just can't do it.�