Bay Area businesses still in survival mode


in front of pandemic, San Francisco-based Papenhausen Hardware could sell a garbage disposal for $129 and make about $10 in profit. It wasn’t a king’s ransom, but the kind of deal that has served the West Portal neighborhood for almost 90 years and maintained its location, through earthquakes and multiple fires.

But with COVID-19 concerns behind more and more people, small businesses like Papenhausen are still trapped in a struggle for survival, driven by immutable economic laws and the pandemic. We are fighting permanent change.

Modern garbage disposal? Papenhausen owner Karl Aguilar says he doesn’t even sell them anymore. At prices with accelerated inflation, just putting it on the shelf would cost a store $150, not to mention the cost to the customer, including markups. He said he wouldn’t buy the

This is a similar story for shovels, disposable gloves, and other items with ever-thin margins. Aguilar says the math points him in one direction, coupled with still low foot traffic in his portal’s commercial corridor West, which has long relied on downtown commuters passing through the city of San Francisco. Stated.

“We are running at a loss,” he said. “If we continue like this, we’ll just end up with huge amounts of debt. And bankruptcy is the end of it.”

Victor Wong (right) purchases caulk from sales associate Annabeth Russell (left) at Papenhausen Hardware in San Francisco, CA on Wednesday, March 8, 2023. Expensive and not worth replacing frequently.
Victor Wong (right) purchases caulk from sales associate Annabeth Russell (left) at Papenhausen Hardware in San Francisco, CA on Wednesday, March 8, 2023. Expensive and not worth replacing frequently.
Tharg Wismas/The Chronicle

Wednesday, March 8, 2023, Papenhausen Hardware, San Francisco, CA.
Wednesday, March 8, 2023, Papenhausen Hardware, San Francisco, CA.
Tharg Wismas/The Chronicle

Above: Victor Wong (right) purchases caulk from sales associate Annabeth Russell (left) at Papenhausen Hardware in San Francisco. Karl Aquilar says that some parts such as certain shovels, sanitary gloves and caulks have become so expensive that they are no longer worth replacing frequently. Bottom: San Francisco Papenhausen Hardware / Salgu Wissmath, The Chronicle

For low-margin Bay Area businesses like retail, food and other small trade industries are considering closing after braving the pandemic’s most uncertain year. That possibility was especially on the minds of many store owners early in the pandemic, as city, state, and federal funds were pumped into local economies to keep employees on payroll long after they were used. . And while the dramatic economic collapse that many feared during the darkest hours of the pandemic has largely not materialized, many local shops have held out for as long as they could, with roads gone and business slumped. After I finished, I released the shutter. , never really returned to normal.

In some cases, the pandemic has accelerated trends that have existed for years, leaving longtime local businesses dangling the proverbial sword in the face of rising costs.

For Berkeley interior design salvage yard Ohmega Salvage, it’s finally gone too far. After about half a century of business, April 14th will be the last day.

“We can’t afford to lose any more. It’s simple,” says General Manager Steve Smith. “As our accountant says, ‘building soup he can’t run a kitchen’.”

The business was not even breaking even before the 2020 disaster, but “the business didn’t really recover after the pandemic was over,” says Smith. The sconce and furniture that hung in Berkeley’s San He Pablo His Avenue warehouse last year can often be found online for comparable prices, Smith added.

Rising costs, including employee medical bills, are also forcing salvage yards to raise prices, making them less competitive with online retailers that offer perks like fast and free shipping, Smith said. says Mr.

So Omega Salvage will stop doing that.

Rodney Fong, president and CEO of the San Francisco Chamber of Commerce, said: He noted that San Francisco’s expensive city permits, competition from online retailers, and public safety concerns have become increasingly prominent since a shelter-in-place order was imposed in March 2020. Did.

“This is very difficult. The worst thing for small business owners is the unpredictability,” says Fong.

“We want fly fishing stores, hat stores, all the cool, quirky costume stores on Haight Street,” he says, noting that the neighborhoods around town and the Bay Area as a whole feature heavily in them. I added that it depends.

Fong added that economic conditions are starting to stabilize as more workers return downtown and stop by local businesses, but the loss of predictable customers and face-to-face work schedules has put workers at risk. Many small businesses are finding it difficult to maintain sales. Sometimes it’s still too late to come back.

The drop in sales was most pronounced in downtown San Francisco zip codes, but sales were also flat in many areas of the city compared to pre-pandemic.

This represents an ongoing pain for businesses not just in the downtown core, but spread across the city.

From the third quarter of 2019 to the third quarter of 2022, four downtown zip codes recorded double-digit declines in sales tax revenue between 12% and 32%, according to city data. During that time, zip codes including Hunter’s Point saw a 14% drop, while the southwestern part of the city, including the San Francisco Zoo, saw an 11% drop.

Nine San Francisco zip codes increased sales tax from 0% to 10% over the same period.

In the San Francisco metropolitan area, office occupancy rose to 46% of pre-pandemic levels in the first week of March, according to data from card-reading security firm Kastle Systems.

New business formation in San Francisco increased in January and February after two months of slow growth, especially in the food service industry, according to figures from the San Francisco Controller’s Office.

The trend of businesses not holding up when the hoped-for recovery did not materialize is not limited to retail stores and restaurants. The pandemic has changed not only how Bay Area residents shop and work, but also how they play.

That’s evident in the planned closure of San Jose’s Tabard Theater. It will be closing on April 2nd after hosting the last show of the month. The cause was a combination of various factors, said Jonathan Rhys Williams, Live Theater Executive His Artistic Director. Audiences have not fully returned, pandemic assistance programs have ended, and the cost of living in the region remains high.

“As an arts organization, we have survived most of the last three years on emergency COVID funding,” Williams said, referring to Paycheck Protection Program loans and other state and federal funds. As of this year, he added, “it’s almost done.”

It’s not just that emergency funds are running out. With community donations slowing and attendance remaining at around 40% of his 2019 levels, the math no longer works. “We need someone back in the theater. We need a butt in the seat,” Williams said.

He also said that friends and colleagues in the performing arts across the country are grappling with similar issues. It’s going to come,'” Williams said. So far, no.

Still, he plans to keep the space, but he’s back to music and comedy rather than full-blown theatrical productions, especially since COVID has made it much harder to stage plays with sizable casts. We plan to focus.

“The reality is that as soon as one member of the cast tests positive for COVID, that person will have to be quarantined and will no longer be able to be part of that cast,” Williams said. “It could mean having to shut down an entire show for a week or 10 days instead of swapping out one musician or rebooking a comedy act for another night.” .”

Even for small businesses that survived the pandemic, the costs of staying open during the recession were high.

“In terms of revenue, it’s about on par with 2019,” said Manuel Torres, who owns and operates a franchise of commercial printing company AlphaGraphics in the SOMA area. Meetings going through San Francisco, though not as many as before.

The main reason for this is that his core business of catering to conferences has become increasingly precarious as conferences were canceled during the pandemic and delayed plans in the city. With the help of stopgap measures like the Paycheck Protection Program, Mr. Torres weathered the worst of it, but eventually closed his second location in Marin County, leaving his 13 employees there. said he was forced to let go of the

These days, his San Francisco location is down to about 11 employees, including him and his wife, compared to 17 before the pandemic.

Despite the lean time, Torres said things are looking up. He hired a new employee to help him reach out to clients, keeping him busy and enough meetings back in town to even start thinking about adding shifts.

“We want to get back to where we were. We want to launch,” he said, noting that he’s ready to take on more clients. It’s not over.”

Adriana Rezal from Chronicle staff contributed to this article.

Contact Chase DiFeliciantonio:; Twitter: @ChaseDiFelice

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