Baltimore Sun

Small businesses in a bind

As inflation prompts a rise in goods, many owners hike prices — and lose customers

- By Mae Anderson

NEW YORK — Inflation isn’t only costing small businesses money. It’s costing them customers as well.

At the Bushwick Grind Cafe in Brooklyn, Kymme Williams-Davis has raised prices and switched to different types of goods to keep up with the rising costs of milk, coffee, paper goods and plastic, as well as shortages of items such as paper cups and plastic lids.

She hasn’t experience­d anything like this since opening in 2015.

Williams-Davis says she has lost nearly half of her regular customers. Some have traded down and are buying coffee for $1 at the McDonald’s or bodega on either side of the cafe instead of paying the $3 she charges.

“If (customers) can get it for a dollar for not that notable of a difference, they’re going next door.”

One customer who had been coming in for years stopped in to tell Williams-Davis he bought himself a coffeemake­r.

“He said, ‘I’m going to start making coffee at home, I need to budget, so I won’t be coming in here every day,’ ” she said. “I feel like I’ve been on a goodbye campaign.”

Inflation has been rising at nearly the fastest pace in 40 years, driven up by strong consumer spending and higher costs for food, rent, medical care and other necessitie­s.

On Tuesday, the government reported that price increases slowed in August compared with a year ago, largely because of a steady drop in the cost of gas.

Prices for other items, particular­ly food, are likely to keep rising quickly.

Overall, economists forecast consumer prices rose 8.1% in August, compared with a year ago, down from 8.5% in July, according to data provider FactSet.

For much of the pandemic, small-business customers were largely tolerant of price increases and kept on spending.

But now owners say they’re seeing some pushback.

Ninety-seven percent of small-business owners say inflationa­ry pressure is the same or worse than it was three months ago, according to a survey of more than 1,500 small businesses by Goldman Sachs 10,000 Small Businesses.

Sixty-five percent have raised prices to offset higher costs.

And 38% say they’ve seen a decline in customer demand due to price increases.

Nicole Miskelley, who manages PMR, an auto and diesel repair shop in Marion, Illinois, said she has seen customers delay repairs that aren’t urgent such as scheduled maintenanc­e or getting new tires.

At the start of the year, Miskelley’s labor costs rose 12% and the cost of towing cars to the shop went up due to higher gas prices.

Parts are more expensive too. Last year, an air conditione­r processor would cost her $200, but this year she can’t find one for under $400. So, she’s had to raise her average price for a repair by 30% to 40%.

Her customers have noticed.

“Typically, I am able to joke about how drasticall­y different things are now and most agree with me,” she said. “On occasion, I deal with push back,” including the rare bout of yelling or cursing by a customer.

“Among a lot of my older customers, who are on restricted income like Social Security, they say they have to cut back,” she said. “They say, ‘I know I need these tires, but I need to make a couple more rounds (of Social Security) to save up.’ ”

 ?? BEBETO MATTHEWS/AP ?? Kymme Williams-Davis takes orders last week at the cafe she owns in the Brooklyn borough of New York City.
BEBETO MATTHEWS/AP Kymme Williams-Davis takes orders last week at the cafe she owns in the Brooklyn borough of New York City.

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