‘We Have To Stop Bleeding,’ Small Businesses Grapple With Second Lockdown

Sep 14, 2020

Small businesses owners on Oahu say constant disruptions from efforts to curb the spread of COVID-19 are making survival increasingly untenable.


   

Before March, it was common to see a dozen or more people standing in a tight line outside Breadshop on the corner of Waialae and 8th Avenues in the Honolulu neighborhood of Kaimuki.

 

In the era of COVID-19, those lines have disappeared, replaced with an online ordering and scheduled pick-up system. Breadshop, owned by baker Chris Sy,  was one of the first local establishments to pivot to a socially-distanced model in March.

 

That initially allowed Sy to continue operating with only a relatively modest disruption to revenue and customer flows, 6 months of oscillating restrictions on business and massive uncertainty over what comes next have taken their toll. He and his fellow business owners are worn down.

 

“Everyone is drained,” Sy said over the phone. “Whatever resources people had back in April, everyone took a hit.”

 

While months of restrictions have taken their toll on everyone, small business owners are feeling particularly stressed.

 

Survey data from the University of Hawaii Economic Research Organization indicates that by April monthly revenue to small businesses had dropped by 60% on average, although many were down far more.

 

Just up Waialae Avenue from Breadshop, Melissa Bao is the owner of one such business. She operates the ice cream shop Via Gelato on 12th Avenue, and made the decision to close during the initial lockdown in March over staff concerns about health.

 

Bao continued to pay Via Gelatto’s workers during that time and was eventually able to reopen with social distancing restrictions in pace. After generating zero revenue in April, income began to climb in May when lockdown orders started to ease.

 

In the period between lockdowns, a spaced line of masked customers could be seen outside Via Gelatto during warm summer evenings. The ongoing spike in cases has once again but a damper on business, which Bao said is stressing both businesses and their owners.

 

“From my experience talking with small business owners, they’re just so, so tired,” she said in a phone interview.

 

They have good reason to be. According to the University of Hawaii Economic Research Organization, Via Gelatto’s experience appears to be typical of other ventures. Business income tanked in March and April, but began to increase in May, when restrictions were eased.

 

However, those gains have now been largely erased, according to UHERO Executive Director Carl Bonham. In a recent meeting of the State House Select Committee on COVID-19, Bonham noted that data from August indicated revenue to businesses has dropped off once again.

 

“We were back to where we were in May, so we’ve completely reversed the progress,” he explained.

 

Notably, that decline happened while cases were surging but before the latest lockdown took effect. By Bonham’s analysis, that indicates the virus itself is substantially depressing economic activity, not just government restrictions people and businesses.

 

In many ways, this second hit appears poised to be worse for small business owners than the first. In April, the federal government poured billions of dollars into Hawaii’s economy, in the form of paycheck protection loans and supplemented unemployment.

 

This time, Congress appears nowhere near agreement on additional assistance. Baker Chris Sy says the seesaw of closing and opening also creates additional costs, on top of lost revenue.

 

“You bleed money to open and you bleed money to close. There’s a lot of product that gets wasted and a lot of extra labor that has to occur,” he explained.

 

Gelato purveyor Melissa Bao says that bleeding has to stop and implored state and local government officials to step in with rent forgiveness measures for commercial tenants.

 

“It’s just untenable for small business to pay full rent when they’ve lost their income through no fault of their own,” she commiserated.

 

Bao says that rent forgiveness is often the deciding factor between survival and closure for local small businesses. She and other owners are calling on elected officials to do more to help in that area.

 

Last week, the Honolulu City Council passed a resolution asking the Caldwell Administration to forgive the property taxes of commercial landlords who offer rent relief to their tenants. But so far, the city has not pursued that option, instead offering one-time grants to help small businesses offset costs from the disruption, including rent.

 

On Friday, a spokesperson for Mayor Kirk Caldwell said the city is open to any idea that helps small businesses, but did not specifically address rent forgiveness.