The Ones That Never Reopened: The Pandemic’s Impact On Local Businesses
Throughout the coronavirus pandemic many businesses have had to cope with closing and reopening as the state goes in and out of various types of lockdowns. But there are some businesses that have never reopened, either because they weren’t allowed to or because financial strain forced permanent closure.
For almost a year Rey the penguin has had full reign of the Monterey Bay Aquarium… well almost. It’s more like Rey is taking supervised field trips to visit some of the other sea creatures -- like the fish in the kelp forest and otters.
“Just so pretty. Shall we go keep walking?” said Aimee Greenebaum speaking to Rey. Greenebaum leads the team that cares for resident birds.
Rey has this special luxury because since the start of the coronavirus pandemic the aquarium has never reopened.
“For the last 11 months, we've had no one coming in through the door, any paid guests at least,” said Cynthia Vernon, the Chief Operating Officer of the aquarium. “So we’re down in terms of revenue. We've had zero revenue coming in from an earned standpoint.”
Typically the aquarium earns around $60 million in revenue a year, Vernon said. That money is used to care for the 80,000 of different animals at a cost of $1.3 million per week. To offset the costs they’ve had to dip into their endowment. And they continue to run a donation campaign that’s raised over $20 million.
To cut back on expenses, the aquarium let go some of its full time staff.
“We had to lay off about 40 percent of that staff, which amounted to about 240 people who were laid off. So we're just heartbroken that we lost so many valued and great colleagues, but we felt it was necessary,” Vernon said.
Heartbreaking But Necessary
The same sentiment is echoed by In-Shape CEO Francesca Schuler. Prior to the pandemic the company had 65 fitness clubs in secondary or mid-sized markets across California, including five in the Monterey Bay area.
“When we closed in March, we had a little over 3,100 employees. We now have a little over 600. So that's an 80 percent decline in team members,” said Schuler.
What does that look like locally for In-Shape? Schulder said 260 staff members have been laid off; two clubs have closed permanently in Carmel and Pacific Grove; and the company is going through bankruptcy.
“We voluntarily filed for Chapter 11, but needed to do that because we had no revenue for a year and needed to restructure the company,” Schuler said.
She is optimistic though, saying they have new investors and that restructuring will help them weather the long term.
“Don't get me wrong, as a CEO of a company going through Chapter 11, it is really hard. But if I think about the bigger impact on our state, it's the health of our communities and the unemployment,” Schuler said.
She believes that if fitness clubs had been allowed to safely reopen more, as part of the state’s Blueprint for a Safer Economy, that could have had a positive impact on health, particularly for those with chronic illness, because people would’ve kept their exercise routines up.
The Blueprint, as it stands, only allows outdoor exercise in the most restrictive purple tier; 25 percent indoor capacity in the orange tier and expands from there.
"So we believe we would have been part of the solution and the business devastation would not have been nearly as big as it's going to be. We're still not open, by the way,” Schuler said.
Schler is frustrated with the state. She’s calling on the current administration and public health to open up dialogue with them.
Small Business Devastation
“I don't think small businesses can weather too many more months of not having sales or having restricted sales,” said Rob Fairlie, a professor of economics at UC Santa Cruz. He focuses on entrepreneurship, racial equity and labor markets. His research on the pandemic has revealed the devastating impact on small businesses nationwide.
Fairlie studied two months in 2020, February and March, and found the overall number of U.S. business owners plummeted 22 percent.
“The entire Great Recession, which lasted just a little bit over one and a half years, we only saw a five percent drop in the number of active business owners in the US,” Fairlie said.
And like the actual coronavirus, the impact has disproportionately affected minority communities. During the two month period Fairlie studied, African-American owned businesses dropped 41 percent, Latinx businesses declined 32 percent, Asian businesses went down 26 percent, compared with white-owned businesses declining 17 percent.
The impact is not just on businesses that closed altogether or those that can’t open because of restrictions. Fairlie is also seeing an impact on businesses that’ve been allowed to stay open.
“Consumers are worried, right? Not wanting to take the risk to go to different businesses and expose themselves, not wanting to walk around and do casual shopping like we would normally see on a weekend or different times of the day,” he said.
Fairlie says there’s a real concern that some small businesses could go under permanently. And adds it's up to local communities to do their part in supporting them.
On the other side of that spectrum, for businesses like In-Shape and the Monterey Bay Aquarium, they’re ready to reopen safety, they’re just waiting for permission.