Downtown businesses in the U.S. and overseas adapt to survive as COVID means fewer office workersMae Anderson | APon September 14, 2021 at 11:00 am

Downtown businesses worldwide once took for granted that nearby offices would provide a steady clientele looking for breakfast, lunch, everyday goods and services and last-minute gifts.

Now, as the coronavirus continues to keep many offices closed and workers at home, some downtown businesses are adapting, and others are trying to hang on.

Some already are gone. The survivors have taken steps such as boosting online sales or changing hours, staffing levels and what they offer. Others are relying more on residential traffic.

Many business owners had looked forward to a return toward normalcy this month as offices reopened. But now that many companies have postponed plans to bring workers back due to a surging number of COVID-19 cases spurred by the Delta variant, downtown businesses are reckoning with the fact that adjustments made on the fly could well become permanent.

In downtown Detroit, Mike Frank’s cleaning business was running out of money and, it seemed, out of time.

Frank started Clifford Street Cleaners eight years ago. Pre-pandemic, monthly revenue was about $11,000. By last December, when many downtown offices had to close, revenue had dropped to $1,800, Frank said.

He borrowed money from his wife to pay the bills.

“It got down to, I was almost ready to go out of business,” Frank said.

Instead, he converted part of his store into a small market, offering toothpaste, laundry detergent, shampoo, bottled water, soft drinks and other essentials. He also delivered clean laundry and goods from the store.

In downtown Detroit, Clifford Street Cleaners owner Mike Frank (left) helping one of his dwindling number of cleaning customers. Things go so bad during the pandemic that Frank converted part of his business to a small market offering goods like a convenience store sells.Mike Householder / AP

Eventually, some foot traffic returned. With the combination of retail sales and dry cleaning, revenue is back up to about $4,100 a month, he said — enough to keep him afloat. And things are improving each month.

In Lower Manhattan, 224 businesses closed in 2020 and 2021, according to the Alliance for Downtown New York. About 100 have opened.

With fewer potential customers coming downtown, “It just becomes not as worth it to pay the higher cost of being downtown,” said Christie Baer of the University of Michigan Centeron Finance, Law and Policy.

“There’s no question, it’s hard for business districts like ours,” said Jessica Lappin, president of the Alliance for Downtown New York. “We miss our workers. Nobody misses them more than local businesses.”

Lappin sees office workers likely coming back for maybe two or three days a week, on different days or on different shifts.

“Just in the way we had to adjust so dramatically to being at home all the time, there is an adjustment to coming back,” she said.

A block from Wall Street, Blue Park Kitchen used to have lines out the door each weekday as office workers waited to buy one of the grain bowls Kelly Fitzpatrick offered as a healthy lunch option.

Now, Fitzpatrick said, “Things are completely different,” with online orders accountting for 65% of the business today.

Those are less profitable, though, because the online apps take a cut. Higher-margin catering orders remain nonexistent. And Blue Park has cut its staff by nine workers.

“At our peak in July 2021” — before the Delta variant surge — “we had about 65% of peak pre-COVID business,” Fitzpatrick said.

He has seen more offices reopen and hopes more companies return in October ahead of the usually slower holiday months of November and December, when more workers take time off.

Nearby, Aankit Malhotra took over Indian restaurant Benares with his brother in 2019. When the pandemic hit, their core clientele of nearby bankers vanished. No one came in for the $13 three-course lunch special the restaurant was known for. Previously, lunch accounted for 95% of Benares’ business.

Now, Benares has about 10 lunch orders a day, down from 100. But locals, grateful that the restaurant kept its pre-pandemic hours of 10:30 a.m. to 11 p.m. every day, are keeping the brothers afloat.

Business is back to about 70% of pre-pandemic levels, helped by delivery and dinner meals. The clientele has changed from workers to younger people and families from nearby Battery Park City.

“It’s becoming more of a family-oriented place,” Benares said.

Jorge Guzman, an assistant professor of business management at Columbia University, said the shift of economic activity away from downtowns is likely to last. There has been a boom in entrepreneurship in non-downtown New York areas like Jamaica, Queens, and the South Bronx.

“Downtowns are not going to die exactly,” Guzman said. “It’s not like Midtown’s going anywhere. But it’s going to be a little bit more of a mix, more residential and mixed-use concepts.”

In London, office workers slowly have been trickling back to their desks since the government lifted COVID lockdown restrictions on July 19. The United Kingdom saw a peak of Delta cases in July, but the numbers fell sharply in about two weeks. Recently, though, the number of cases has been rising again.

The number of commuters is nowhere near pre-pandemic levels, making it tough for small businesses in Central London’s financial district to survive.

Rado Asatrian cuts a customer’s hair at Man-oj hair salon in London’s financial district. Before COVID-19, Asatrian usually had 10 to 15 customers a day, but now it’s down to three or four. Kelvin Chan / AP

Before the pandemic, Rado Asatrian, who has worked as a barber at the Man-oj hair salon in the financial district for six years, usually had 10 to 15 customers a day. It’s down to three or four.

“Now, it’s just so empty,” said Asatrian, who is considering moving to a busier location, switching careers or moving abroad.

In some downtowns, while the workers are still laregly remote, tourists are back and providing a boost.

In Atlanta, Kwan’s Deli and Korean Food is doing about as much summertime business as it did before the pandemic, said Andrew Song, whose family owns the restaurant. At the height of the pandemic, Kwan’s had lost about 80% of its business, reduced its hours and cut staff. But the deli has bounced back thanks to tourists visiting the Georgia Aquarium and events at a nearby convention hall.

Still, the Delta variant is creating uncertainty about the fall.

“It’s sort of hard to imagine what it will look like with office regulars not returning or being more remote,” Song said.

In Nashville, Lyle Richardson, chief operating officer for restaurant operator A. Marshall Hospitality, said he has seen the city’s restaurant industry ravaged by the coronavirus epidemic and estimates that hundreds of restaurants have closed.

Richardson — who’s on the board of the Tennessee Hospitality Association — stopped serving lunch at one restaurant, Deacon’s New South, to focus on dinner once office workers went remote. But he kept his other restaurant, Puckett’s Grocery & Restaurant, open from 7 a.m to 11 p.m. to attract tourists flocking back to the city.

“The normalcy we called pre-COVID, that no longer exists,” he said. “We have to be prepared, on our toes, to adapt. “

In Detroit, business at Cannelle by Matt Knio, a downtown bakery and sandwich shop, has rebounded above 2019 levels after a precipitous dropoff. Baseball and football crowds are back, and outdoor dining and takeout remain popular.

If businesses are subject to more restrictions when the weather gets colder, Knio said he thinks he can rely on the lessons learned so far in the pandemic to get by.

“I think we know our way around now and how to deal with it,” he said. “We’ll be able to do takeout and curbside pickup.”

Davion Lyons makes a drink for a customer at Cannelle by Matt Knio in Detroit. Downtown businesses such as Cannelle that once took for granted an office-worker clientele have had to adapt as offices remain closed and workers stay home. Mike Householder / AP

Read More