Amid forced closures, Ann Arbor businesses question future of local economy

Sunday, April 5, 2020 - 4:59pm

Local businesses are wondering—and worrying—about how the economic shutdown due to COVID-19 will affect their business and the economy.

Local businesses are wondering—and worrying—about how the economic shutdown due to COVID-19 will affect their business and the economy. Buy this photo
Dominick Sokotoff/Daily

On Friday, March 13, two days after the University of Michigan canceled in-person classes and moved to online instruction for the rest of the semester, Kathy Roos, the owner of RoosRoast Coffee on East Liberty Street, removed half of the chairs from the cafe’s seating area. The change was meant to promote social distancing — a phrase that has, in the past few weeks, come to epitomize the self-isolation needed to slow the spread of the rapidly growing COVID-19 pandemic.

“We were ahead of the game,” Roos said. “We did that because we were very aware of what was happening.”

Now, with Gov. Gretchen Whitmer’s Stay Home, Stay Safe Executive Order mandating the closure of all “non-essential businesses,” RoosRoast remains reliant on a curbside to-go business operating out of their Rosewood Street location. Even with these kinds of services, Roos said she is not sure Ann Arbor’s small businesses will survive prolonged shutdowns. 

“This could destroy the local economy,” Roos said. “That’s a really strong word. But when is this going to end? How long can businesses remain closed? And all the amazing, deep local, idiosyncratic Ann Arbor local businesses — they can’t survive. They’re not going to be able to survive being closed for too long.”

The coronavirus pandemic hit when rising rent prices and an increase in development across the city were already putting a strain on local businesses. In 2018, 18 businesses closed, with most closures affecting businesses that had been open for more than 25 years. Rent prices also soared in the past year, leaving business owners struggling to pay their employees at rates that would allow them to reside within city limits. 

But the pandemic and subsequent executive orders have placed local businesses in a unique situation, leaving many to rely on community support in order to meet their rent and pay employees. 

Literati Bookstore, a staple bookshop on East Washington Street, raised more than $115,000 through a GoFundMe campaign last month. Literati’s owners, Mike and Hilary Gustafson, met their goal of $100,000 just days after the fundraiser opened on March 23. Many stores and restaurants have followed suit, hoping community donations will be able to sustain their businesses until the pandemic subsides and the city reopens. 

Information sophomore Summer Nguyen was scrolling through Facebook one day in late March when she came across another GoFundMe page for a small Ann Arbor business. Nguyen, realizing the serious implications of Whitmer’s executive order for local businesses, decided to create a post with the links of multiple GoFundMe campaigns to spread awareness about the calls for donations.

“I realized that there are so many more small and local businesses that I care about in Ann Arbor that may not be seen,” Nguyen said. “It’s kind of hard to pinpoint which ones are actually accepting donations and are in need of support right now. So I thought it would be a good idea to just compile the ones that I could find in the local downtown Ann Arbor area that people knew about and would be willing to support.”

Nguyen said stay-at-home orders and citywide shutdowns have led students and community members to feel powerless in the face of a looming economic crisis. Turning to fundraising platforms, she said, may be one of the only ways to actively contribute. 

“It can be kind of a helpless situation,” Nguyen said. “There’s not much that we can really do since we’re all quarantined inside our homes. By donating, I feel like it’s one of the best ways to kind of fight back and provide a good contribution to this entire thing.”

Jessie Lipkowitz, the owner of aUM Yoga on South University Avenue and a University alum, echoed this feeling of helplessness after being forced to shut her business’ doors late last month. In an email to The Daily, Lipkowitz said business may not return to normal even if the studio was granted permission to reopen. 

“Even if we were able to re-open our doors tomorrow, the University of Michigan has cancelled spring term classes, and the months of May-August are already a gigantic hurdle that Ann Arbor businesses face every year,” Lipkowitz wrote. “The ripple effects of this pandemic will continue for months, if not for years to come.”

Like the Gustafsons, Lipkowitz turned to GoFundMe in an attempt to preserve her business, which opened on North University Avenue in September 2013 and expanded to a new space in 2015. She said she remains thankful for the community’s support even as she struggles to keep the business operational in preparation for its reopening. 

“It is hard to put into words how much gratitude we have, knowing that members of our community are willing to contribute in a time that is undoubtedly difficult for everyone,” Lipkowtiz wrote. 

Ann Arbor Mayor Christopher Taylor said the city has been implementing small initiatives to help small businesses feeling the impact of COVID-19, such as making parking in Ann Arbor free. This allows individuals to more easily pick up take-out meals and conveniently park outside of restaurants, Taylor said.

“The market impact of COVID-19 is substantial and continues to spread,” Taylor said. “As primarily a municipal service-providing organization, we don't have resources to provide grants and things like that to enterprises. We do have some levers that we’re working on.”

Taylor said most small businesses in Ann Arbor are on triple net leases by which tenants have property tax responsibility. He said the city will continue to provide services such as water supply, police stations and fire stations during the pandemic.

“State law limits our flexibility with respect to the collection of property taxes, the timing of property taxes, and that’s something we’re working with the state to see whether we can obtain any flexibility there,” Taylor said.

Just a year after graduating from the Ross School of Business in 2013, Max Steir opened the first location of the fast-casual restaurant Salads UP on 611 E. Liberty St. In 2015, Steir and his business partner, Robert Mayer, opened a second location in Madison, Wis. At the time, the pair were looking to introduce healthy, fast-casual dining spots to college towns that lacked these kinds of options. 

“Our goal was to fill the void at the University of Michigan for quick service, healthy food, specifically with a focus on salads,” Steir said. “And we saw that that void wasn’t just missing in our beloved college town of University of Michigan, but in college markets and traditional university towns nationwide. We have a lot of aspirations for future growth, in addition to the two locations we have today.” 

As University faculty are being ordered to work from home and office cafeterias across the country close, Steir said Salads UP has lost a good portion of their revenue streams without knowing when they will be able to start serving again. 

“We have a large catering service,” Steir said. “We have a drop-off service of pre-packaged salads to even the U-M hospital. We have onsite cafeteria service at various office parks in Wisconsin and Michigan, or University faculty buildings. All of these recurring business avenues have been canceled for an unknown period of time.”

After growing their business to two locations in just under two years, Steir said his team now faces a challenge unlike any they have experienced in previous years. With takeout and delivery becoming the last lifelines for restaurants and cafes, he wondered whether mobile ordering and pickup services will transform the future of Ann Arbor’s foodservice industry.

“I think that there will be lasting impacts for quite a while,” Steir said. “Part of that impact, on a lighter note, will be customers will have adjusted quite admirably or even more so to delivery or pickup and online mobile ordering options. And I think that will impact the industry of food service nationwide — it already has dramatically, but I think that will only increase. And I think that, in general, we will not be alone in regrouping after this because whatever normal is and whenever normal happens, it will not be a quick snap of our fingers and all of a sudden everything is normal again.”

Roos said one of the most difficult aspects of the indefinite closures will be needing to sacrifice her business’ profits for the sake of public safety amid an unprecedented global health crisis. 

“How can we keep each other safe and keep our local economy alive and well?” Roos asked. “These are really tricky things to balance.”

Business sophomore Harika Kolluri said she appreciates small Ann Arbor businesses, frequently getting food from Chela’s, Sadako and Ray’s Red Hots. She said she also enjoys campus yoga and fitness studios such as aUM Yoga, Red Yoga and MVMNT.

Kolluri said she has noticed her peers donating to GoFundMe pages for local businesses as well as getting food delivered in an effort to support them through the pandemic. She said many of these businesses have been utilizing social media platforms to raise awareness of any struggles they may be facing.

To provide support during COVID-19, Kolluri said her business fraternity Delta Sigma Pi has created a GoFundMe page on March 29 to collect donations for multiple small Ann Arbor businesses such as Avalon Housing, Moon Cafe, BTB and the Michigan and State theaters, among others. As of April 5, the GoFundMe page has raised more than $500. 

In addition to the GoFundMe page, Kolluri said her business fraternity recently created a fundraiser on Instagram called Instagram Dare.

“Everyone posted on their Instagram story and people would donate money and we would do dares, like post a video complimenting someone or post a TikTok or post a childhood photo and an embarrassing photo,” Kolluri said. “And it was really, really successful. And I think we’re up close to around $1,000 right now and then I think we still have a couple more things we're planning on doing before we donate however much money we make.”

With many college students — many downtown Ann Arbor businesses’ prime source of revenue — not on campus and Ann Arbor residents staying home, Kolluri said she can see how difficult it may be for small businesses to stay running.

“It’s hard because we all go back to campus in the fall and a lot of favorite places that we like to eat and go to may not be there anymore,” Kolluri said. “We're going to be going back to a very, very different campus.”

Daily News Editors Barbara Collins and Liat Weinstein can be reached at weinsl@umich.edu and bcolli@umich.edu.