COMING UP EMPTY
PANDEMIC TOOK DRAMATIC TOLL ON SMALL BUSINESSES:
While the death toll of the COVID-19 pandemic cannot be understated, neither can its lasting economic effects — especially on small businesses that struggled to survive amidst stay-at-home orders, limited occupancy mandates and other restrictions that, while propagated in the name of safety, nonetheless bit savagely into bottom lines.
“That first two weeks there was a lot of optimism,” said Trish McFarland, president of the Delaware County Chamber of Commerce. “And then when everybody realized it was going to be a lot longer and things started to set in, I think it was almost like panic and I think disbelief that this was really happening.”
Confusion reigned, toilet paper disappeared and even thriving businesses were forced to temporarily – and in some cases permanently – shutter their doors.
Among them was popular hair salon DeJa Vu on State Street in Media, which had grown year
“When this hit, like everybody else we were just in trouble,r. We did take the loan out to stretch it out a couple months, but even after a couple months we were still in the same spot. Even though regulations relaxed a little bit, people were still scared to come out, so it was kind of a no-win situation. Once people got used to staying in and were scared to come out, there was just no coming back from that.” — John McCosker, co-owner of popular hair salon DeJa Vu on State Street in Media
over year for a quarter century prior to the pandemic. Co-owners John and Linda McCosker, who had turned operations over to their daughter Rachel Tarbutton about five years prior, said it was like hitting a brick wall.
“When this hit, like everybody else we were just in trouble,” said John McCosker. “We did take the loan out to stretch it out a couple months, but even after a couple months we were still in the same spot. Even though regulations relaxed a little bit, people were still scared to come out, so it was kind of a no-win situation. Once people got used to staying in and were scared to come out, there was just no coming back from that.”
Job loss figures soared in those early months. The unemployment rate had been trending downward in the county since July 2012 and hit a multi-year low in April 2019 at just 3.3 percent, according to the U.S. Bureau of Labor and Statistics. By April 2020, that figure had skyrocketed to 14.7 percent. The biggest hit for the Philadelphia metropolitan area was and remains the leisure and hospitality industry, which suffered 77,600 jobs lost between November
2019 and November 2020.
The business closure rate for small businesses in Delaware County as of this month stands at 35 percent, said County Counciwoman Elaine Schaefer – below the average of 40 percent for Pennsylvania, but still a mighty blow for commerce.
Unemployment has since settled back down to a more manageable 6.1 percent as of December, the last month on record, but the damage was already done by that point and may be far from over, according to McFarland.
“A lot of people will compare this to the pandemic in 1918, which essentially led to the Roaring ‘20s, right? So people are ready to come back and I believe it will come back stronger than ever. I’m hoping once we hit 80-degree days on a consistent basis, with the vaccine and all the other things we’ve done that we’ve been asked to do, I think we’re going to see a lot of people getting back out and going to bars and restaurants. I’m optimistic for the second half of the summer.”
— Joe Magee, owner of Marty Magee’s in Prospect Park
“It’s really sad,” she said. “I do think over the next year, we’re going to see more businesses that just aren’t able to maintain. Right now there’s a lot of government aid and credits and different opportunities they can take advantage of, and hopefully that will get them through, but I don’t think we’ve seen the worst of it yet in terms of the economics of business.”
John McCosker shared some of those sentiments about his profession.
“Our clients offered us money and loans and whatever they could do to keep us going, but you just know you can’t pay it back because it’s not coming back,” he said. “Our landlord tried to give us a break, everybody was great to us, but we couldn’t just keep throwing money after something that wasn’t open, and even when it gets open, I don’t think that that particular business is ever going to come back.”
Delaware County Council initially teamed with the chamber and the Delaware County Commerce Center to try to get at least some relief to businesses right away, said Schaefer.
“At the very beginning, we didn’t have (The Coronavirus Aid, Relief, and Economic Security) Act money, so we were really scrounging around and looking in every coffer to help our businesses,” she said. “The Redevelopment Authority contributed, the Delaware Valley Regional Economic Development Foundation, they put in money, we put in some of our money, so the first round of grants were not as big because we didn’t have a source.”
“As we look back now, we can kind of see how it all worked, but it really was just information coming out and people trying to figure out where they can go for help, are they going to be able to pay their bills – it was just scary for everybody,” said McFarland. “There was so much information and it was so overwhelming and people were still in shock, so we tried to make it easy for folks to understand and I think that really helped to kind of put it in an easier light: If we take this one step at a time we will all get through this.”
The county implemented a “Delco Strong” program, which
provided grants up to $7,500 for small businesses under 50 employees. The county originally had just $1.75 million available, but Schaefer said an injection of CARES Act funding brought the total to $6.5 million by June 2020.
Business relief efforts – which included providing guidelines, help with paperwork and protective materials to businesses in kits – have now risen to nearly $20 million in grants for more than 1,600 local businesses, including about 100 non-profits, said Schaefer.
“Once the CARES Act kicked in, we were really able to put some resources to help our businesses,” she said. “A lot of them took advantage of it and it was very meaningful help for many of them. We got some great feedback from some companies that it really did make the difference and help them keep their doors open.”
Among them was the Magee Hospitality Group, the umbrella under which restaurateur Joe Magee operates a trio of Prospect Park bars: Marty Magee’s, the Tumble Inn and John Morton’s Tavern.
Magee said he was able to take advantage of Delco Strong and later CARES Act funding to help keep his businesses afloat, and plans to do so again with another round of funding specifically targeting the hospitality industry that opens up March 15, but added he is lucky to have the business acumen and bookkeeper on hand to do so. Many small businesses don’t, he said, and that can hurt them in trying to navigate the proper paperwork to get much needed relief as the state suffered not one but two shutdowns – one right before St. Patrick’s Day and the second right before Christmas.
John McCosker noted there was a lot of worry in the intervening time about making sure laws were complied with even when businesses could operate.
“Everybody tried to stay open and they just got slammed with every kind of law, so now they’re looking at going to jail or having their license taken away,” he said. “If you weren’t scarred of the virus, you were scarred of the laws.”
“Prior to COVID even being a thing, being a small business owner is hard, it’s challenging and we always refer to it as the feeling of pushing a boulder up a mountain,” said Tara Endicott, co-owner of Burlap and Bean in Media with her husband, Brent. “You have a team of people behind you in support of your vision and what you do, but the boulder belongs to you alone as the business owner.”
Normally, Endicott said small business owners enjoy the challenge of figuring out how to get past everyday hurdles, but the pandemic presented a seemingly insurmountable hurdle – something neither she nor her husband had seen in their 14 years in business.
Burlap and Bean, which previously also had two spots on the Delaware County Community College campus and a flagship store in Newtown Square, saw a drastic reduction last year to just the Media location. Sort of by providence, leases on the other three locations came up last year and they decided not to renew, Endicott said.
“Thankfully, we had the freedom in front of us to make these decisions,” she said. “I think our ship would have sunk if we had been locked into two leases at the college, a lease at Newtown Square, plus we own Media, so we have a mortgage here.”
Endicott said she feels for the
Newtown Square community, which also lost a music venue and gathering spot with the closure of that store. She described it as somewhat bittersweet; grief mixed with pride at what she and Brent had accomplished, as well as the closing of one book while moving on to a sequel.
Throughout the pandemic, Endicott said Burlap and Bean had also been able to make use of available funding to keep at least one set of doors open and keep staff on, albeit consolidated at Media with reduced hours. She also plans to take advantage of the new round of funding that opens March 15.
“All these little things have added up to giving us hope and we’re able to stay positive,” she said. “Where we are right now, we’re confident that we’re going to be able to make it through this. That’s basically what we’re focused on. We just have our horse blinders on – we’re looking forward, we’re not looking back.”
Delaware County was able to move from “red” to “yellow” in Gov. Tom Wolf’s color-coded restriction chart on June 5 as a “stay-at-home” order in place since March 23 was lifted. This allowed some loosening of previous restrictions, including outdoor dining at bars and restaurants, opening of some previously shuttered businesses and gatherings of 25 or fewer people.
By June 26, coronavirus numbers were down enough for the county to move to the “green” phase, allowing bars and restaurants to open at 50-percent capacity while continuing to adhere to rules laid out by the state Health Department and Centers for Disease Control and Prevention.
McFarland said that change in June was something of a turning point. There had been a lot of questions about how to safely and legally conduct business, and questions of why big national chains like Target and Home Depot could remain open when smaller businesses – who might take greater strides to protect their loyal clientele – had to keep the doors locked. Regardless of party affiliation, she said, there was a clear sense that there was a disconnect between the state and the reality of commerce.
“That was kind of like the shining moment as we’re looking at the last year, the turning point where businesses started to reopen and it all started to connect, like, ‘Oh wait, I can do this,’” she said. “You didn’t feel like you were doing something wrong when you came out of your house. We weren’t out of the woods – we’re still not out of the woods – but it began to give people a little bit more hope.”
But the second closure in December
as COVID-19 made a strong comeback left many business owners reeling, Magee included. Overall, he was down 68 percent in revenues for last year, a huge deficit for an industry that operates on very thin margins.
With COVID-19 numbers now suppressed across the state, Magee is critical of continuing mandates that he said seem to be tailored more for restaurants than the bars and taverns that make up the vast majority of liquor licenses in the state.
He argued there should be a more equitable tiered system that expands late-night hours, takes into account shift workers of all types and removes food requirements for beverage orders.
“Take away the food requirement – nobody’s follow it anyway,” Magee said. “They can’t, it’s impossible. How can my kitchen serve 60 people food at the same time? …The second thing is, we live in a blue collar county where people work all around the clock. Happy hour isn’t 5 to 7 o’clock for people in Delaware County. There’s three shifts a day, so get rid of that and the governor could get so much good will.”
Magee is hoping some of those restrictions will loosen as vaccines become more widely available and the country returns to some semblance of normalcy over the next several months. He envisions 2021 as a transition period, but has high hopes that 2022 will be everyone’s year in the industry.
“A lot of people will compare this to the pandemic in 1918, which essentially led to the Roaring ‘20s, right?” said Magee. “So people are ready to come back and I believe it will come back stronger than ever. I’m hoping once we hit 80-degree days on a consistent basis, with the vaccine and all the other things we’ve done that we’ve been asked to do, I think we’re going to see a lot of people getting back out and going to bars and restaurants. I’m optimistic for the second half of the summer.”
Schaefer noted that the county is also changing up the playbook when it comes to economic development in the future. The nicer weather and vaccine supply ramping up will undoubtedly have a positive impact in the near term with so much pent up consumer demand, she said, but in the long run, County Council is making moves to consolidate and focus economic development with a more clear, proactive mission.
“We are going to get all the business members together, and all of the people who are involved with the authorities and in the Commerce Center and do some high level comprehensive thinking on how best to support our businesses, large and small, in the upcoming five years,” Schaefer said. “It’s not going to be the same old same old, old-fashioned economic development. We are coming out of a pandemic and the issues are different, the supports that our businesses need is different, and we want to be more proactive in supporting what our businesses need and in bringing in new businesses than we have as a county before.”
Schaefer said the county hopes to have a game plan in place within six months to help businesses rebuild with an eye to developing new industries like technology and renewable energy.
“We are an energy county,” she said. “This county depends on the energy industry, but that industry is changing and we need to be equipped and at the ready, and proactively looking to incorporate those changes in our energy infrastructure.”
McFarland said the chamber is also excited about the prospect of bringing all the fractured arms and legs of economic development together and working holistically to better energize and support the businesses in the county.
“We have shown over the past year that we are so much stronger together and there really are opportunities where, when we’re all on the same page, we can get more done quickly,” she said. “We’re not anywhere near to being over with any of this. We’re still going to have to be cautious, we’re still going to have to wear masks and be mindful that we’re not out of it yet, but I think everybody’s really positive and they’re cautiously optimistic.”