Photo: Justin Shugrue in his bagel shop, Shug’s Bagels on March 23, 2026.. Shugrue started Shugs Bagels in Dallas during the pandemic. Now, after moving to Austin, he’s preparing to open a fourth location, but says the process has been the most onerous yet. Brian Diggs for Austin Current
Steep fees, bureaucratic red tape and lengthy approval processes may be driving small business owners out of Austin or discouraging them from opening altogether.
Some Austin districts once known for their iconic local businesses have undergone significant transformations in recent years. South Congress Avenue, for one, was once lined with homegrown shops, but is now overwhelmingly dominated by out-of-state brands with deep pockets. While increasing costs of construction and rent have undoubtedly been a driving factor behind this shift, a new report presented to city officials Friday argues that onerous and arcane permitting processes are also contributing.
“Austin’s process is so complex that the only entrepreneurs who could make it through easily are those who can hire permit navigators or who can withstand the opportunity cost of delays,” said Ava Mouton-Johnston, city policy coordinator for Institute for Justice, the public interest law firm behind the report. “These small local entrepreneurs were getting started and succeeding despite the city, not because the city was actually supporting them in their policies and rules.”
Mouton-Johnston’s team found Austin’s permitting process for opening a restaurant can cost nearly $9,000 and require up to 105 steps, creating costly delays that disproportionately affect under-resourced prospective business owners.
Texas Reporter 