Businesses ‘on the brink,’ but not ready to ‘throw in the towel’

i Jun 16th 2020

By Bill O’Boyle, Wilkes-Barre Times Leader

WILKES-BARRE — Just how far-reaching the effect of the COVID-9 pandemic will be remains to be seen, but two things are certain — several Luzerne County businesses have closed and many others are on the brink.

Wico van Genderen, president/CEO at the Greater Wilkes-Barre Chamber, said it’s really still too early to accurately assess the situation.

“But we are not yet ready to throw in the towel,” van Genderen said. “We will know more by year-end, but this one’s a tough one for sure.”

Luzerne County will enter the green phase of Gov. Tom Wolf’s economic recovery plan on Friday, which will see many businesses that have been shut down for months reopen under the “new normal” of limited capacity, social distancing and mask wearing.

“Clearly the early losses are going to be with businesses with pre-conditions, coupled with those requiring high volume/in person connections like retailers or restaurants,” van Genderen said. “For example, going into the pandemic, some national chains like JC Penny’s and Pier One Imports had already announced cuts in store locations and the pandemic may have accelerated their demise. And in the high volume/in person connection, razor thin margin restaurant business, a recent national survey expects 1 in 4 restaurants to not survive through the end of the year.”

To that point, El Zocalo Mexican Restaurant on Public Square, S&W diner on North Main Street, the Beer Deli in Forty Fort and Bob Evans Restaurant in Wilkes-Barre Township are among those that have closed for good.

While clearly sobering, van Genderen said the Chamber has focused on flattening the losses and inoculating regional businesses with a “Respond, Return, Re-imagine” Recovery Plan.

• In “Respond” the Chamber has pivoted to aid businesses to shore up their balance sheets with access to federal, state, and local loans and grants along with regional resource pages to business, health/wellness, and operational/structural information.

• With “Return” the Chamber is working with county, community, health and business experts to establish plans, sequences and protocols to re-open with the governor’s phased approach.

• And with “Re-Imagine,” the Chamber is working to determine what businesses and labor force will need to look like in the post-pandemic new normal to build for growth, resiliency and sustainability.

“It’s going to be tough, it’s going to be complicated, and we need to build-in contingency plans for a relapse,” van Genderen said. “There are no road maps or historical analogies to lean on, but we are learning, we are resolute and we will rebound.”

Problem is statewide/national

Prior to the arrival of COVID-19, Rep. Aaron Kaufer said Pennsylvania was home to more than 25,000 restaurants, which employed 408,000 people. Of those 408,000 employed in February, 332,000 have been laid off or furloughed. That’s 81% of the entire workforce.

In April, restaurants that were still operating reported an 82% decline in sales, which equates to $1.8 billion in lost sales. Further, it is now estimated that as many as 20% of these restaurants may never reopen.

“That will have a devastating impact on families and communities throughout the Commonwealth,” said Kaufer, R-Kingston. “We need to provide relief for these businesses now.”

More closures expected

Larry Newman, executive director at Diamond City Partnership, said he is certain that there will ultimately be more closures. He agrees with van Genderen that it’s still too early to tell.

“Our focus, wherever it’s possible, is on helping businesses recover and return to profitability,” Newman said. “While I can’t speak about the circumstances of specific businesses, I can say that, in general, COVID has accelerated a national retail die-off that’s been occurring for several years now.”

Newman said the reality is that the United States’ retail market was overbuilt long before the pandemic came along. On a per-capita basis, Newman said the U.S. has more retail square footage than any other country in the world — and even before the COVID pandemic began, the country had a billion square feet of retail space sitting vacant.

Newman went on to say that before the pandemic, e-commerce sales still only accounted for about 10% of all U.S. retail sales. And if 90% of retail sales are still occurring in physical stores, there’s a lot of room for erosion, he said.

“For example, today there’s more than 5 million square feet of retail space in the Greater Wilkes-Barre area,” Newman said. “More than half of that had been added to the market during the past 30 years. Our area’s population dropped, but the retail square footage doubled. So, of course there’s going to be a shakeout — it’s long overdue.”

Newman added: “As far as closures go, one thing I know for certain is that we are going to lose some businesses.”

Newman said he worries to the point of insomnia that a second wave of the coronavirus could happen in the fall — his biggest fear is that it could occur around Thanksgiving and Black Friday, traditionally the biggest shopping time of the year.

“We remain hopeful that a vaccine will be found soon,” Newman said. “And we continue to search for innovative ideas to help businesses during this pandemic.”

Businesses make tough decisions

The Beer Deli, 175 Welles St., Forty Fort, closed its doors in March and the owner said the restrictions brought about by Gov. Wolf’s order to allow take-out only is the main reason for her decision. She said she understands the reason for the governor’s decision, but the effects on her business were devastating.

Jodie Rivero, the 58-year-old owner, said there were several “extenuating circumstances,” but she said since the order came down to allow take-out only, she just couldn’t continue. She said only herself, her brother and her chef were working and it became “just too much” for them.

“I made the decision to close for good,” she said. “It was just getting too exhausting.”

The Beer Deli was open more than 33 years, having been operated most of those years by the Roccograndi family.

Rivero said she didn’t know what she would do next.

El Zocalo opened in 2014 after its owners relocated and renamed the business. It closed last week.

A Facebook post announced the closing: “We would like to inform our beloved costumers that our locale will close its doors for good. We thank our loyal costumers that stuck with us throughout the years. Thank you.“

After 68 years in business, the S&W Restaurant on North Main Street has closed and is for sale.

Ernie Schmid Jr. co-owner of the iconic downtown diner with his brother Joe, said the restaurant closed because the business license with Wilkes-Barre City had expired and they decided now was the time to lock the doors.

“We had come to this decision prior to the pandemic,” Schmid said. “We felt this was the year to think about closing and selling, then the pandemic hit and that made up our minds.”

“We were the last diner in the downtown,” Schmid said. “It’s the end of an era.”

S&W opened in 1952.

County goes green Friday

In addition to salons and barber shops, several other types of businesses will be permitted to reopen at half capacity in the green phase, including restaurants/bars, fitness centers, spas, shopping malls, theaters and casinos.

Hair salons, barber shops and other personal care services must accept customers by appointment only, and appointments are strongly encouraged for fitness centers and other indoor health and wellness facilities, the state said.

Masks are still required when entering a business, it said.

Large gatherings of more than 250 are still prohibited in the green phase.

Businesses operating at 50% occupancy in the intermediary yellow phase may increase to 75% occupancy under green, and telework is still strongly encouraged, the state said.

Construction activity is permitted to return to full capacity, with continued use of coronavirus safety protocols.

In a recent Times Leader story, Luzerne County Manager C. David Pedri praised residents for bringing down the county’s coronavirus cases by social distancing, following public health guidelines and supporting each other in “countless ways” during the “trying time.” Pedri also thanked healthcare employees, first responders and other essential workers continuing to care for and help county residents.

He reminded residents to remain vigilant with hygiene and social distancing.

Reach Bill O’Boyle at 570-991-6118 or on Twitter @TLBillOBoyle.