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THE BROAD VIEW

Small businesses across US weigh the challenges and cost of reopening

With no revenue for months, they must find ways to pay for new sanitation regimens, thermometers, plexiglass, masks

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More US states are allowing restaurants, offices and retail businesses to reopen after being closed, some for as long as three months, to fight the spread of Covid-19.

TIFFANY Turner had dinner recently in a restaurant - the first time in nearly three months. She was greeted by employees in cotton face masks and seated at a table that was a socially distanced two metres from any other.

"The thing I was surprised by, as a guest, is that it was less awkward than I expected and more human energy than I expected," she said. "People's eyes are starting to tell a story more than they ever did."

It was a reassuring experience. Ms Turner was preparing to reopen Adrift Hospitality, her group of five boutique hotels, a restaurant and a distillery on the Oregon and Washington coasts. She wondered if people would return to public life and if there would be any sense of human connection.

That is the same question that other small-business owners are asking themselves as more US states are allowing restaurants, offices and retail businesses to reopen after being closed, some for as long as three months, to fight the spread of the novel coronavirus.

The percentage of small businesses that were open in early June was nearly 16 points higher than it was in mid-April, according to Opportunity Insights, an economic tracker developed by researchers at Harvard using anonymised data from credit card processors, payroll firms and others.

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But with a patchwork of rules and guidelines being issued at the city, county, state and federal levels, many employers find themselves wondering when it will be safe to open and how to make that choice - especially as some states are seeing an uptick in new cases of Covid-19.

Some businesses are taking a slow approach. At first, Chris Lynch and Michael Samer were not sure what to do about their ocean adventure tours business, Everyday California, when they got the go-ahead in late April.

"In the beginning, it was scary," Mr Samer said. "We wondered, 'Do we even want to reopen?'" But the two friends, who started the company in San Diego 10 years ago with just an iPad, an old truck and some kayaks, did not want to give up. They had been on a pace for a banner 2020: Sales were up 50 per cent in the first two months, and March was looking just as good. And they realised the water might be one of the most socially distant places someone could be.

They decided to reopen with curbside kayak and surf rentals only, keeping their retail shop and tour business closed. Then, as they felt more comfortable, they reintroduced tours at a 50 per cent capacity with everyone wearing a mask. They also invested in their neglected online shop.

The bet paid off: They increased what had been a very small number of online merchandise sales by 710 per cent in May, allowing them to bring back about 20 employees to help with shipping and marketing. So far, the best-selling items on the website have been hats. "It might be because no one can get a haircut," Mr Lynch joked.

A slow rollout is not happening only in places, like California, that have been Covid-19 hot spots. In Montana, which has the fewest cases in the US, some owners are also taking a wait-and-see approach.

Governor Steve Bullock allowed bars and restaurants to reopen in early May with 50 per cent capacity limits and layout restrictions, but Brett Evje held out until the end of the month before bringing customers back into Plonk, the New American-style restaurant that he co-owns. It has locations in Bozeman and Missoula.

He used the down time to refresh the Bozeman location, updating the heating, ventilation, and air conditioning system, installing new bar equipment and doing all the projects he said could never complete with a restaurant open 365 days a year.

"Everybody wants to return back to normal. But from my standpoint, you're already closed so you might as well wait and see what the reaction is going to be," he said. "There's nothing as hard as remobilising and bringing everyone back and then having to close down again."

The cost of reopening is another challenge. With no revenue for months, small businesses must find ways to pay for the new sanitation regimens, thermometers, plexiglass, masks and other items necessary to open.

"None of the relief packages have included specific funding for safety retrofitting, purchasing of safety equipment or even helping business getting a handle on uniform PPE (personal protective equipment) for employees and customers," said Amanda Ballantyne, executive director of the Main Street Alliance, an advocacy group for small business. "The lack of those things creates a disparate recovery kind of landscape."

Staying open has been an expensive proposition for Hanover Co-op Food Stores. The company, which is owned by its 24,000 members, has been open throughout the pandemic as an essential business at four stores in Vermont and New Hampshire.

That has cost nearly US$400,000, said Allan Reetz, the company's director of public and government affairs. The biggest expense was staffing. The co-op gave all of its nearly 400 employees a flat bonus plus offered US$2 an hour extra. It also went through with a planned cost-of-living increase in April. Other expenses included equipment, signage, communications and plexiglass dividers.

Ms Turner at Adrift Hospitality said she was able to keep these costs to about US$10,000; her employees could build most things on-site. Her main expenses were reconfiguring Adrift Distillers into a hand-sanitiser manufacturer and paying additional workers to manage new sanitation regimens and check-in systems. Another cost: disposable masks for guests - who are using about 100 per day.

With capacity limited and demand uncertain, small-business owners - even those whose operations are larger - said it is hard to know whether to spend the money to reopen now or to wait.

Elliot Nelson, who owns McNellie's Group, with 20 restaurants in Arkansas and Oklahoma, is sifting through his spreadsheets daily to see what it is going to take to keep going. "It's been a long time since I've gone through the financials like this," he said.

He started bringing his empire back online gradually in May, beginning with outdoor dining. But six weeks later, business is still slow; sales are about one-third their normal level. "Our best-case scenario, maybe we're 60-70 per cent revenue by the end of the year," he said. "And that's just a breakeven - and only that if I'm not paying my debt service."

He is reconsidering every cost: rent deals with landlords, reduced menus, trash collection, monthly computer expenses. He and his wife even met a lawyer to see if they should get a divorce as a wealth-preservation tactic. "These are the mind-boggling conversations we're having," he said. NYTIMES

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