A wealthy Californian enclave has backpedaled its ban on fast-food chains after failing businesses, dwindling tourism and homelessness has left the city on the brink of disaster.

Santa Monica is attempting to recover after declaring ‘fiscal distress’ in September, as the city has begun to welcome back fast-food restaurant chains following tight restrictions. 

The city’s Third Street Promenade has already seen the opening of chains such as Raising Cane’s, while Taco Bell announced its own plans for a location, amid the city’s desperate attempt to bring the once-glitzy coastal enclave back to life.

The downtown area of the city kept many fast-food chain restaurants at bay since 1988, until 2018 when restaurants with over 100 locations were completely barred. In 2021, the ban was made permanent and restrictions were raised to 150 locations.

But following Santa Monica’s struggles with the Covid-19 pandemic, homelessness, vacancy rates and wildfires, officials started to loosen restrictions. 

By August of 2025, the restrictions on fast-food chains were eliminated permanently as the city was in need of over $60 million to maintain its current services, Santa Monica Daily Press reported. 

As the ban was lifted last year, support came from the likes of City Councilmember Ellis Raskin who said: ‘I think that in this time of economic recovery, it’s important to have that flexibility.’

Taco Bell was even specifically named in the city’s efforts to enforce tighter restrictions over fears of pricing out smaller businesses. 

Santa Monica’s Third Street Promenade, seen above, has seen the opening of chains such as Raising Caine’s, as Taco Bell has plans for a location, as its fast-food chain ban is rescinded 

Santa Monica’s struggles with the Covid-19 pandemic, homelessness, vacancy rates and wildfires left the city in dire straits

Foot traffic is said to be improving along the Third Street Promenade, but officials remain cautious of celebrating too soon as vacancy rates of approximately 20 percent continue to plague the downtown area

Over recent years, locals and residents were left completely disheartened by their dwindling city.

One longtime resident of Santa Monica said earlier this year that they couldn’t help noticing how much the area has changed.

‘So many stores are shuttered, foot traffic feels lighter – even on weekends – and there’s this weird energy, like it’s stuck in limbo between being a tourist spot and a local ghost town,’ the user wrote on social media.

‘I remember when it used to be a lively place for shopping, street performers, late-night food and just good vibes overall. Now it feels like more people walk through than actually stop and enjoy it.’ 

Local officials and business groups also acknowledged that foot traffic in the area declined sharply since the pandemic.

According to Santa Monica Travel & Tourism, visitor numbers and pedestrian traffic in the downtown district dropped significantly during the COVID era and have been slow to recover compared with pre-2020 levels.

An estimated 4.2 million visitors traveled to Santa Monica in 2024, a nine percent decrease from the 4.6 million visitors in the year previous, according to one report. 

Retail analysts say the combination of remote work, changing shopping habits and the rise of online retail has hit urban shopping corridors particularly hard, with numbers continuing to decline.

Recent homeless statistics from the Los Angeles Homeless Services Authority (LAHSA) found 475 unsheltered people living in Santa Monica in 2025, down by four from the previous year

Efforts to bring the city back to life include the increase of police presence, relocating the city’s homeless shelter further from the Promenade, slashing outdoor dining fees and implementing AI software to fast track building and business permits

Retail analyst Neil Saunders of GlobalData told the Daily Mail: ‘Some malls are suffering because patterns of demand have changed. It is hard to turn things around.’

At the same time, commercial rents and operating costs remain high, making it difficult for smaller businesses to survive. 

Along with independent outlets, several major retailers have also left the area in recent years, contributing to empty storefronts along the Third Street Promenade. 

However, hopes for the city’s recovery remain intact as City Manager Oliver Chi told the Wall Street Journal: ‘There was a real sense, I think, a year ago that maybe Santa Monica’s best days were behind it…it can still be one of the coolest places on the planet.’

Foot traffic is said to be improving along the Third Street Promenade, but officials remain cautious of celebrating too soon as vacancy rates of approximately 20 percent continue to plague the downtown area. 

Tourism took a hit due to a number of problems, including political friction, homelessness and drug abuse. 

Michael Mandel, the co-owner of Pier Pizza and Subs on the city’s pier, said mental-health crises and open drug usage scared off many families and shoppers.

‘The open consumption of drugs in public is absurd,’ he told the WSJ. ‘You clean that up, you know, you start to see the streets get cleaned up again.’

The city’s once-stunning beachfront was also gifted the nickname ‘Sleeping Bag Beach’ due to scenes of sleeping bags, blankets and personal belongings strewn across the Santa Monica shoreline

Council candidate Derrick Townsend previously told the Daily Mail that homeless people have been ‘going to the bathroom on the beach, digging holes in the sand to do it. There are fires. It’s legitimately degrading our economy’

The city’s once-stunning beachfront was also gifted the nickname ‘Sleeping Bag Beach’ due to scenes of sleeping bags, blankets and personal belongings strewn across the Santa Monica shoreline.

Council candidate and photographer Derrick Townsend previously told the Daily Mail that homeless people have been ‘going to the bathroom on the beach, digging holes in the sand to do it. There are fires. It’s legitimately degrading our economy.’ 

Townsend continued: ‘Safety for people walking around, elderly residents, businesses, the environment – all of it is being affected.’  

The sense of fear, he said, now stretches far beyond the beachfront.

‘I talk to moms who say, “I can’t let my son walk to school anymore,”’ Townsend said. ‘People are paying an enormous amount of money to live here, you shouldn’t feel like your kids can’t walk to school safely.’  

The city has long wrestled with homelessness, but residents say the crisis has escalated.

Many residents and business owners blame decades of liberal leadership, arguing city policies have focused heavily on homelessness programs while failing to address concerns over public safety, downtown decline and quality of life.

‘Santa Monica is starting to get known for this,’ Townsend warned. ‘Businesses are closing. People are throwing bricks through windows.’ 

Townsend, seen above, referred to the dire homeless situation as ‘a degradation of the fabric of our society’

Townsend highlighted one incident involving a vicious attack that shuttered restaurant Blue Plate Oysterette in January this year.

The restaurant owner Jennifer Rush described to FOX11 incidents including a homeless individual slashing the restaurant’s patio screens with a knife, break-ins, and a propane tank thrown at the front window.

‘We see mentally ill people wandering the streets on a daily basis, screaming at people,’ Rush told the outlet. 

‘We go to the park across the street and it’s illegal to have a glass of wine, yet people are sitting there doing drugs – and nothing seems to happen.

‘We’ve had break-ins. We had a guy throwing a propane tank at our front window. Our staff doesn’t feel safe, and tourists see that and don’t want to come back,’ Rush said.

Townsend also blasted the current Los Angeles County’s approach to addiction and homelessness, taking aim at harm reduction policies.

‘They call it harm reduction, giving people clean needles so they don’t get diseases while doing drugs,’ he said. ‘The problem is they’re giving people the tools to do drugs and never get better, in public parks as well!’

The needle distribution program has been operated weekly by the Venice Family Clinic under the guidance of the Los Angeles County Public Health Department at Reed Park in Santa Monica for more than two years. 

Santa Monica has long been one of the most expensive coastal cities in California with the cost of living there is roughly 150 percent higher than the national average 

The program, which provides free clean needles, Narcan and fentanyl testing strips, aims to help those struggling with drug addiction.

However, critics say the program harms the people who live there. A petition of more than 22,000 signatures has called for an end to the program.

Recent homeless statistics from the Los Angeles Homeless Services Authority (LAHSA) found 475 unsheltered people living in Santa Monica in 2025, down by four from the previous year.

It also identified 202 people living in shelters, compared with 173 in 2024.

Locals have said another reason they visit less often is the rising cost of eating and shopping in the area.

Santa Monica has long been one of the most expensive coastal cities in California – the cost of living there is roughly 150 percent higher than the national average – and menu prices at restaurants along the Promenade have climbed sharply in recent years amid inflation and higher labor costs.

For some residents, that has made a casual outing feel out of reach.

Officials hope that planned upgrades will help tackle the ongoing challenges to provide a ‘vibrant atmosphere’ before the 2028 Olympics.

Upgrades, which were approved by the council as part of a ‘realignment plan,’ include the inclusion of designated ‘entertainment zones’ that would allow open alcohol containers over the weekends. 

Efforts also included the increase of police presence, relocating the city’s homeless shelter further from the Promenade, slashing outdoor dining fees and implementing AI software to fast track building and business permits, the WSJ reported.  

‘The real way to get back to prosperity is we need the local economy to thrive again,’ Chi told the outlet. ‘What we can do is create an environment in the city that’s investable.’

The Daily Mail reached out to the City of Santa Monica, Santa Monica City Council and the Santa Monica City Planner for comment.