Surviving the COVID-19 recession
The COVID-19 recession moves like a forest fire: Wiping out some businesses while leaving others barely touched. The Business Tribune takes a look at the suburbs to see how they are doing.
In Forest Grove, a college town 25 miles west of Portland, we looked at businesses on a typical Main Street, Small Town, USA, and asked: Have the twin demons of a pandemic and recession wiped out the business community? (Median household income in Forest Grove was $59,902, up 24% since 2014. However, it lags Washington County's, which was more than $80,000 in 2018.)
Some places are doing fine, like the hardware store, because so many are stuck at home, focused on their four walls. The antique mall has a low-stress business model that is surviving. The coffee shop, however, is feeling the crunch. Government handouts are reaching the people and there are plenty of takers. Persistence and neighborly goodwill are the twin fuels that are keeping these places alive.
The corner coffee shop
On the grass outside the house containing Telvet Coffee at 1940 Cedar St, there's a small wooden platform which holds one café table and two chairs. It's a sign of how far the owners will go to provide safe seating to patrons, in a business that once bustled with students and casual customers.
KC Nguyen manages Telvet with his brother, the owner, and says it's been a hard summer. For a while they shut down except for takeaway and delivery., Now they have a few seats inside and upstairs, and on the porch.
"We tried it but it went nowhere, because we don't have a drive through. It cost me more to have someone standing there serving. So, we shut down for two months," said Nguyen.
Since reopening in June under Phase 1, business has been steadily growing to where it's about 65% of what they used to in a typical summer.
"You can have up to 25 people but as you can see, it never gets to that." On that August afternoon, upstairs the chairs are piled up and one woman worked silently in the conference room.
"We tried to spread things out and put out as many outside so the customer feel they're more comfortable."
There's room for 25 in the entire coffee shop, and he hopes students will return to study at Telvet. He didn't just lose student customers in March. Bible study groups and many seniors have stayed away. "We used to have a lot of senior folks coming in here hanging out, just chatting with their friends. But it's a little more difficult because they're a higher risk group. I've seen some of them are starting to come back out. So, we're struggling, but we're slowly getting a little bit better."
There used to be 10 staff doing 40 to 45 hours a week, now there are five doing around 30 hours a week. Two are Pacific U students and two are high school students, and he expects them to cut their hours as classes ramp up.
Nguyen is considering signing up for Doordash, the delivery service that has boomed in the pandemic, despite the fact that it tried to takes a 35 percent cut of sales (some municipalities limit the rate).
"I heard they cannot charge more than 10% during this pandemic. They say they'll honor it, so hopefully they will."
His costs have increased. Minimum wage has been going up for the last three years (now $13.25 an hour) as have coffee and pastry prices since March, and he still has not raised his prices but feels he will have to soon.
Nguyen says people still spend well when they do make a purchase.
"Maybe people are still generous, they tip a little more for my girls."
The Hawaiian eatery
Hawaiian-themed restaurant Kama'aina has shrunk under COVID-19. The Main Street restaurant business lost its concessions in the Moda Center and Veterans Memorial Coliseum when live entertainment collapsed. Now owner Kevin Yamada only has his Main Street space in Forest Grove and one food cart. So, he's retooling his whole business rather than quit.
"I lost a huge amount of my income," Yamada said. "And I lost a lot of my income from the food truck because I was doing corporate events and everybody was paying corporate rates. I lost my weddings, I lost my wineries."
Kama'aina in downtown Forest Grove did well because Pacific University has a lot of students from Hawaii who crave island comfort food, but school attendance is now uncertain. Social distancing doesn't help; even during the lunch rush there's no atmosphere, just people avoiding one another and picking up to-go bags.
"There's a thin line between failing and not failing. I only open enough tables where I'd only need one person working so I can keep the cost of labor down," Yamada said.
Until school was out they gave away thousands of free meals to students, no questions asked.
Going to online ordering helped, but there was a lag until July, when it took off.
He's now considering moving the restaurant from Forest Grove to somewhere more lucrative in Portland. Not downtown because of the high rents, protests and riots. And it has to have a drive-thru.
"If I want the business to succeed, I have to follow the money," he said. He's seen spots in Grant Park and Happy Valley.
The rest of his plan is very 2008: invest in food carts. He'll soon own three and will rent out a fourth. He's been parking his mana bowl truck outside apartment complexes. When everyone was home all day he did lunches. Now the money is in dinners, since Washington County entered Phase 1 — the first of three phases, as designated by Brown and the Oregon Health Authority, for handling the pandemic and reopening each county's economy.
"In January I'm really doubling down on the food trucks because it's been the most consistent through all this," he said.
Yamada said he thinks thing will get worse before they get better. "The flu season is coming and nobody can distinguish between a cold, COVID and the flu. When people cough, people get scared. There's going to be a lot of withdrawal."
The hardware store
Mark Nakajima and his family own the Ace Hardware franchise at 3602 Pacific Ave. He said he was relieved when, in March, the state government said it could stay open as an essential business.
"Since March it hasn't been very different at all for us. If anything, it's been busier," Nakajima said. Sales are up from a year ago, but not significantly. Nakajima is just happy that business didn't crater when the pandemic hit and people have been fixing up their homes.
"They couldn't go to eat, they couldn't go to a movie, so I think they spent a lot of time at home thinking about what they needed to do around the house," Nakajima said. It's been a strong season for customers with a green thumb.
The supply chain must now catch up with customer demand. What kind of things are out of stock?
"Anything related to lawn and garden," Nakajima said. "You estimate what you need. We probably went through double the number of seeds we sell in a season. And you can't go out and manufacture seeds."
Uncertainty is the big issue for the foreseeable future.
"Everything's up in the air right now and information (about COVID-19) changes all the time. I'm fortunate we're not in education (schools and colleges). Every week, education gets a little different idea about how they're going to get ready and do things. We're fortunate that we just do a basic business, basic home improvement stuff. We just try and keep going as best we can."
The antique mall
Karen Allen-Culp has run Forest Grove Corner Antiques and Collectibles for eight years. Dealers sublet space from her and she tends the store. She has 27 vendors and another 30 consigners.
She closed from the March 17 shutdown through May 27. "That was hard, but we did get a $12,000 PPP loan, and that helped us sustain so we could make it through." She waived rents while the store was closed and used the PPP — the federal Paycheck Protection Program — to cover them, utilities and her wages.
"I told my husband I go if I don't get this loan, I have to close," Allen-Culp told the Business Tribune.
Since reopening, her store has been consistently busy. "It's been really good. I was very, very worried when we opened that we just wouldn't have any customers, but we put up all the signs that were requested, marked off the 6-foot markers, got that shield in (at the counter). We've got hand sanitizer in the bathrooms. We have Lysol spray so they can still use the restrooms. Overall, it's been good for us," she said.
Allen-Culp credits the diversity of the antiques and collectibles, which are from 1970 and older. They have everything from vintage clothing to baseball cards, and 10% of the vendor spaces can be for newer items. "Like Pokemon cards, which appeal to the younger kids, and Victorian antiques that relate to the older people."
She lost just one vendor during the shutdown.
"By supporting my vendors, I was able to maintain where I was before," she said.
She has been around the local boutiques and found it sad how quiet they are. She checks in on the other antique store in town, and the gift store, and feels they are not faring as well because their niche is narrower.
Allen-Culp's son helps her on weekends, but it's a one-woman job most days.
"I looked at everything. Anywhere I could cut back I did. There wasn't a lot, but whatever I could, I did." She cut costs by changing the company that handles customers' credit cards to Square.
"I stopped advertising and only do Facebook and online now. I don't do any print advertising at all. I know. It doesn't pay me back." She pays nothing to Facebook and Instagram.
"Even our website is a free website."
Tourism on hold
Court Carrier, the City of Forest Grove's tourism consultant, said they were about to rebrand the city as a tourist hotspot when COVID-19 hit.
The new slogan, "Branch Out In Forest Grove" dropped in August anyway.
The idea is to sell the city as a great base from which to do other touristy things — visit the coast, Columbia River Gorge, wineries, Portland, hiking and biking — while staying somewhere affordable and bucolic (Forest Grove is all about the trees.)
Carrier says COVID-19 has been the worst thing for tourism in 50 years.
"Some people have been able to adapt their businesses model — for example, restaurants that embraced the takeout and delivery mode.
But those who were relying on fine dining and people sitting down and eating for hours and spending a lot of money, that's not happening.
In Washington County, at one point, we were 90% down from normal levels."
Leisure and hospitality is the city's fourth-biggest sector by employment, trailing education, manufacturing and health care.
Like in many areas of the economy, when one area slows, it hurts workers downstream. Because the city's marketing budget is based on the 12% lodging tax in Washington County, the marketing budget was cut 50% a month ago. The city has not done much with its two social media channels, Facebook and Instagram, until now.
Forest Grove has five major hotels and motels, 30 to 40 Airbnbs, and about 40 to 50 restaurants. Pacific University brings in lodging income with sports teams and alumni, and nearby Hagg Lake has 1 million visitors a year, according to Carrier.
Carrier sees some signs of hope. With Pacific University doing some hybrid courses, hotels have had business from parents and students coming in for orientation.
"But you can't do any large conferences and hold any large gatherings to bring people in. The conferences and meetings and retreats, events, festivals, you name it, most of them have been postponed until next year."
Reporter, The Business Tribune
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