Many businesses closed by COVID are not coming back
Retail association says 30% of members fear going under
THE GREEN BEAN in Northampton was the type of breakfast and lunch place where people would visit daily, hold work meetings, meet their future spouse, or break up with a significant other. With its narrow space and close-together tables, it was the epitome of a restaurant that could not maintain physical distance between customers.
For years, owner Adam Dunetz struggled with increasing food prices, more local competition, and less downtown foot traffic. He typically goes into debt in the winter, then makes up the money with graduations, arts festivals, the gay pride parade, and other spring and summer events. When COVID-19 shut the restaurant down in March, he was at the peak of this year’s debt. Dunetz decided that after 12 years, it was time to close. He worried about amassing “crushing debt” with business unlikely to return to normal any time soon.
“It’s a volume business, and if you’re not able to do the volume then there’s no business,” Dunetz said.
The Green Bean’s experience is not unique. Many businesses are beginning to reopen with new safety standards and reduced capacity, but there are many others that may not be able to reopen at all. And those closures could have a ripple effect on Main Streets across the state.
The Retailers Association of Massachusetts recently surveyed its members and found that 30 percent of respondents were somewhat or extremely concerned that they would not survive the pandemic. President Jon Hurst said many businesses are at the end of their financial rope. They have had to pay for leases and inventory they could not sell. A clothing store might have a large stock of unsold winter coats – but it needs to buy summer clothes to reopen in June. Federal business loans can only go so far.
“It’s the reality of just not having the wherewithal to do that outlay for buying the inventory when you’ve had no income coming in,” Hurst said.
Hurst said businesses know it is unlikely customers will return in droves, whether due to safety or financial concerns. “A whole bunch aren’t going to reopen until they feel like their customers are going to come back and shop and spend money, and right now there aren’t very many that are doing that, and that’s a problem,” Hurst said. “How long do you keep treading water and wait for the customer to come back?”
Reibman said certain industries will be hardest hit. When customers spent three months shopping exclusively online, it might be hard for retailers to entice them back into stores. Restaurants are opening with a slew of new regulations – and when they can reopen has depended on whether they can offer takeout and whether they have space for outdoor seating. Daycare centers have been vocal about the difficulties they will face reopening under new limitations on class sizes and space.
Chris Geehern, a spokesman for Associated Industries of Massachusetts, said a survey of members several weeks ago found that of companies who furloughed or laid off workers, 18 percent said they were not planning to bring those people back. “There clearly is some percentage of companies that are not going to make it through all of this,” Geehern said.
Eric Blomster, the owner of Abraxis Framing in Newton, said he and his wife decided to close their 14-year-old business as a “preventative measure.” He believes the state was right to order businesses to shut down, but he worried about burning through money by continuing to pay rent and bills with no income. He feared business would not return quickly. It took him three years to recover from the 2008 recession, and he does not want to go through that again.
Bob Luz, president and CEO of the Massachusetts Restaurant Association, estimates that Massachusetts will lose 3,600 of the 16,000 restaurants it had as of March 1, and “my fear is that could go significantly higher.”
Luz said even if restaurants could withstand the temporary shutdown, they will still be constrained on how much revenue they can earn for the foreseeable future, with fearful customers and social distancing requirements.
Mary Pat Dauria, the owner of Abbott’s Frozen Custard in Needham and Brighton, had been contemplating what to do with her Brighton store, with her lease ending and expensive air conditioning issues. “COVID was really what put the nail in the coffin,” Dauria said.
Dauria closed temporarily for COVID-19, then reopened with limited hours. But with college students deserting Brighton, sales were way down, and she worried about her employees’ health, despite taking precautions. She is closing the Brighton store for good on Sunday. The Needham store — where she has a takeout window and a better setup for curbside pickup — will remain open.
Max Toste and Aaron Sanders own the Allston bar Deep Ellum and the neighboring Lone Star Taco Bar. Toste said they had been talking semi-seriously about shutting down Deep Ellum to focus exclusively on Lone Star, which had become more of a passion. Once COVID hit and they had to lay off 95 employees, they realized their model to “cram as many people as we can into the two storefronts” with one shared kitchen, would no longer work. “To survive as a company, we had to figure out how to navigate our surroundings and what was happening,” Toste said.They decided to permanently shut the bar and expand the restaurant into that space, taking advantage of having two dining rooms and an outdoor deck to provide safer, more socially distant seating.
Dennis Flavin has owned Halibut Point Restaurant and Bar in Gloucester for 38 years. He just turned 70 and had been thinking about closing, he said. When COVID-19 hit and he let his employees go, he couldn’t stomach starting all over. “First I’d have to hire back all my employees, I’d have to start the whole thing over again, then I’d have to go by new regulations, which would be murder because you need 100 percent of your business to make a living,” Flavin said. “It was just time for me to retire.”