What lies beyond the pandemic? MassForward is MassLive’s series examining the journey of Massachusetts’ businesses through and beyond the coronavirus pandemic.
Due to the coronavirus pandemic, expenses for many businesses across Massachusetts are going up, but incomes have declined for most industries, some by fifty percent or more in many cases. In Western Massachusetts, tourism, restaurants and entertainment venues have seen the largest declines with many businesses looking at furloughs, layoffs and in some cases closures.
Steve Clark, director of Government Affairs at the Massachusetts Restaurant Association told MassLive on Tuesday that roughly three to four restaurants are closing daily across the Bay State as a result of the pandemic.
“There’s a whole number of additional costs that have been added to the industry,” said Clark. “Whether it’s [personal protective equipment] or retrofitting your restaurant or having to invest in different types of things to comply with COVID [restrictions]. All these different types of obstacles have been thrown at the industry. So, you know, I would say that as a whole, things aren’t going great.”
Scott Foster, a Business and Entrepreneurial Attorney and partner at Bulkley Richardson, highlighted a report by Develop Springfield that small businesses are higher than the national average in Springfield and that they are the backbone of the region’s economy.
“When you’ve got a large swath of that disappearing, how does it come back? When does it come back?” said Foster, who is also the chairman of Valley Venture Mentors during a recent interview. “I don’t know.”
Clark said that the restaurant industry is very pliable and will survive the pandemic and come through the other side but there are going to be more challenges ahead.
“I suspect that you’re going to see the unemployment at the lower wage-earning area of the economy be hit more heavily hit than at the higher wage-earning area,” said Foster. “White-collar workers can work remotely, blue-collar workers that have to work at a place cannot work remotely. I worry about how that’s going to affect places like Springfield and Holyoke.”
At the start of 2020, business partners and married couple Alexis Mercure and Orlando Roberts were excited about the expansion of their Jamaican restaurant, Yaad Food, with a second location in Chicopee. The success of their first restaurant in Springfield saw people traveling from across the region, according to Mercure.
“A lot of people are not working. A lot of people are not getting any income, so sales have been dropping and they keep dropping. So, what would I do differently? I probably wouldn’t open a restaurant [in Chicopee]. I would have probably done something else.”
The restaurant has a convenience store, Kal’s, inside the entrance where they stock a variety of food products. Puerto Rican, Jamaican foods and supplies that cater to the neighborhood.
“We’re going with the basic everyday convenience store with a good amount of groceries,” Roberts told MassLive in January.
However, roughly half of the products he was hoping to stock have still yet to arrive. Roberts said the logistical problems are a result of the pandemic.
Both restaurants, Springfield and Chicopee, have seen the food orders drop during the pandemic, and Roberts speculates that the $600 unemployment benefit that ended on July 31 could be part of the decline in orders more recently.
“I don’t know if there’s a direct correlation or if there’s been a reduction since that unemployment benefit has gone down,” said Clark. “It is concerning we have the highest unemployment rate in the country. I think it was 16% the other day.”
Massachusetts had the highest unemployment rate in July, 16% followed by New York at over 15%, according to the U.S. Bureau of Labor Statistics.
“The family-run restaurant is probably closer to living month-to-month than other chain operations where it’s a bigger operation, but conversely the chain operators probably have higher occupancy costs,” said Clark. “I think the effect is the same but it’s you know, there’s so many family-run operators that you probably hear more of them closing.”
Clark told MassLive that before the pandemic, on average a restaurant’s income from to-go orders would account for only 20% of the total. Now, if the restaurant is doing extremely well, that would be roughly 50%.
Many businesses in Massachusetts have relied on the Paycheck Protection Program loans to maintain their commerce and keep the lights on and the doors open. Government funding still has no set date to be distributed.
“I think all these programs are fantastic and they’re critical and they’re necessary. Do I think there’s enough? No, I don’t,” said Foster. “The very fact that you’ve got [over] 20% of small businesses closing tells you there’s not enough support.”
Foster told MassLive that some small businesses he has worked with would have benefitted from the government support but turned the PPP program down.
“It could be that there’s enough support but there’s not enough outreach,” said Foster. “They felt that they were confused about the program. They didn’t understand it, they didn’t trust it.”
Foster said that business owners, in general, aren’t inclined to trust the government when they offer to help and respond with “No, you’re not. I don’t know how you’re not helping me, but I know you’re not.”
Roberts at Yaad Food in Chicopee applied for the government benefits but has not been eligible because his business is less than a year old, according to Roberts.
“You have no history. No credit. Nobody’s not going to give you anything. You pretty much have to make that business work, you know,” said Roberts. “This business is a stressful business. If I let these things get me down, I’ll be down every day.”
Congress is debating a series of sweeping stimulus measures to boost the economy during the pandemic, a multitiered forgiveness process for PPP loans is gaining steam.
“I think a lot of people are waiting for Congress to do something,” said Clark. “To get some sort of funding bill that will put some money into people’s pockets and to help get a forth coronavirus relief bill passed.”
There’s been a growing push to automatically forgive smaller PPP loans from the Small Business Administration. And while Senate Republicans have included automatic forgiveness for loans below $150,000 as part of their stimulus proposal, they have also introduced a middle tier of forgiveness requirements for loans between $150,000 and $2 million.
“I think a number of funds are expected from the federal government, and I think it will come, probably mid-September if they can they can work out their differences,” said Clark. “I do think they’ll be opportunities for the state to do some things whether it’s big buckets of money or running ad campaigns. They can do a whole bunch of different things to support the industry.”
Larger businesses are not immune to the hardships the pandemic has brought with MGM Springfield announcing on Friday that 1,000 employees are to be laid off at the Springfield casino.
“For the protection of workers, federal law requires companies to provide a date of separation for furloughed employees who are not recalled within six months,” said Bill Hornbuckle, MGM Resorts International CEO and president in a letter addressed to employees. “Regrettably, Aug. 31, marks the date of separation for thousands of MGM Resorts employees whom we have not yet been able to bring back.”
The employees separated on August 31 will remain on the casinos recall list and will welcome employees back as the reopening plan progresses, regulatory restrictions are lifted and business demand grows.
“Due to the mandated capacity restrictions and business demand, many of our amenities and venues remain closed for the time being. With these positions currently unavailable, it has not been possible to bring back all of our team members,” said Chris Kelley President & COO in a letter to Springfield employees. “Per MGM Resorts CEO and President Bill Hornbuckle’s letter [Friday], team members that we have not yet been able to bring back will be separated from MGM.”
Although the Aug. 31 date that employees will officially be let go, MGM Resorts International has promised to extend their health benefits for separated employees enrolled in MGM Resorts health care plans until Sept. 30. Employees who return to work by Dec. 31, 2021 will retain their seniority and immediately resume their benefits.
“We’ll also continue supporting current and former employees during these challenging times through the MGM Employee Emergency Grant Fund” said Hornbuckle. “Separated employees remain eligible for financial support from the Grant Fund through November 29, 2020, and we recently expanded its resources to provide additional assistance.”
Another Springfield tourist attraction is the Naismith Memorial Basketball Hall of Fame which has also had to layoff employees.
In July, John Doleva, president and CEO of the Hall of Fame, said the shrine is running at about 35% of its normal attendance. The hall expects total visitor traffic for the year will be about 60% of its annual average of 250,000 visitors after a $23-million renovation that was completed in June.
The 2020 Enshrinement Ceremony festivities have been rescheduled to May 13-15, 2021 and as a result of the delay has also significant financial ramifications and has resulted in the elimination of several full-time positions and compensation cuts in the 25% to 40% range for the most senior management.
“I think to some extent the smaller restaurants and the ones that are able to adapt a little more, may do well,” said Foster. “The ones like MGM [and the basketball hall of fame] that require people from out of the region to come and visit them, [would be] really challenging right now.”
According to an editorial in the Republican, as of April 6, the business of hosting conventions, meetings trade shows and competitions in the Pioneer Valley has taken a $27 million and growing hit from coronavirus.
Funding has been made available to address the shortfall in traffic from people visiting.
The Greater Springfield Convention and Visitors Bureau will step up advertising, in states were people can visit Massachusetts without first quarantining, as well as from within the state, with $250,000 in funding announced by State Sen. Eric P. Lesser on July 27. The money comes from the $1.1 billion supplemental budget signed into law by Gov. Charlie Baker.
Foster’s outlook at the future of businesses large and small is overall a positive one. He told MassLive that Springfield and the region are historically resilient.
“[Businesses] are going to work creatively to find a way to get through the winter of this pandemic, both figuratively and literally,” said Foster. “I know that the business community as a whole wants them to survive. The Hall of Fame is an important part of the identity of Springfield. MGM was a tremendous boost to the downtown corridor and the Big E is not just a nostalgic mainstay but an economic driver for the area.”
Hornbuckle ended his letter to staff at MGM on a positive, highlighting that MGM will bounce back from this, stronger and better than ever.
“Of that, we can all be certain,” he said.
Foster said he wouldn’t be shocked to hear that “some significant companies in the area closed when we didn’t expect it” he said that other sectors have been doing surprisingly well.
“I’ve actually been contacted since the pandemic by two different groups that are looking to buy manufacturing companies in [Western Massachusetts],” said Foster. “If you look at the manufacturing in terms of its role in the economy locally, I think it’s 25% to 30%.”
In May, President and CEO of the Western Massachusetts Economic Development Council Rick Sullivan said that the coronavirus pandemic could draw businesses to Western Massachusetts as companies revert to telecommuting and see the cost of living and doing business in the area lower than other parts of the state.
“I think that many people have been able to be very productive working from home and telecommuting. That’s an opportunity for Western Massachusetts because that can be done quite easily out here,” said Sullivan. “You don’t need to be in Boston or New York.”
In 2018, MassMutual announced that it will be expanding with a new location in Boston and that it will continue to commit to providing 2,000 more jobs throughout Massachusetts. The company confirmed that commitment to MassLive on Wednesday.
“In addition to adding the 180 roles in 2019, we added approximately 560 roles to the state in 2018,” Chelsea Haraty, MassMutual spokesperson told MassLive on Thursday. “As a normal course of doing business, we continually evaluate our operations to ensure we are working effectively, driving greater efficiencies and delivering the best possible experience and greatest value to our policy owners and customers.”
The pandemic has allowed MassMutual to invest in digital solutions that have meant they’ve been able to continue to issue protection during this crisis and also provide higher levels of life insurance coverage without the need for a paramed visit.
A paramed, also known as a paramedical exam, is an interview to collect information about a person’s medical history. This information allows the life insurance company to perform a comprehensive evaluation of their current health. The paramed includes a medical history questionnaire and body measurements.
In April, MassMutual announced a $3 billion commitment to provide no-cost life insurance policies to frontline health care workers through the HealthBridge program. To date, they have issued approximately $130 million of the total to approximately 6,000 health care workers and volunteers.
“This work from home experience has validated how productive an organization can be working remotely, while at the same time, reinforcing the importance of people coming together in the same space to achieve common goals,” said Haraty. “A learning from this experience is that in moving forward, we can provide the best of both worlds.”
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