According to a recent Wall Street Journal article, service businesses are starting to rehire with job gains of 1.2 million in leisure and hospitality. However, some local businesses are struggling to fill the jobs lost during the pandemic closures.
Some terminated employees are afraid of returning to work amid the pandemic while others have medical issues or no childcare. With many banquets canceled and catering not happening, many employees are left out of work.
Others continue to collect unemployment, making more than their typical salaries thanks to the federal government’s CARES Act. But that’s risky, too. Employers can choose to inform the labor bureau that these employees have been invited back to work and have declined or failed to return, and their benefits will end.
According to Lynn Minges, president and CEO of the North Carolina Restaurant and Lodging Association, this is just one of several challenges facing the industry along with reduced capacity, accrued debt and additional costs.
“Businesses are required to operate at 50% capacity, so in and of itself, that is a challenge considering the max amount of money to generate is just 50% of sales from the prior year,” Minges said. “The reality is that most of those businesses are remaining less than full at capacity which means that they are earning 75 to 80% less and not making any money. They are paying some bills, but not coming up positive.”
Having been closed for 12 weeks during the shutdown, many businesses accrued a “substantial amount of debt,” according to Minges, and not making much money currently “exacerbates the problem.”
The new mandates and protocols set forth for cleaning and sanitizing requires additional costs for face coverings, chemicals, and additional staff, which also burden the already fraught businesses.
“The cost of doing business has increased. The cost of food has gone up due to supply chain challenges, and the main issue is consumer confidence. We need to make sure consumers feel confident,” Minges said.
The stark reality is many businesses have closed and will never reopen while others have chosen to remain closed and are “waiting, watching to see what happens, taking a wait-and-see approach,” Minges said. “These are huge risks that these businesses are choosing to take.”
The workforce in North Carolina took a hit, with 300,000 employees losing jobs abruptly on March 17.
The NCRLA took immediate action to protect their hospitality employees.
“We wanted to make sure those in the hospitality community who are near and dear to our hearts were taken care of, making sure that unemployment insurance became immediately available to them, raising $1.2 million in relief funds, and having that additional $600 a week from the federal government,” Minges said.
With the Paycheck Protection Program, many employees were “never separated and paid the entire time,” according to Minges. And now as businesses are reopening, “most [employees] have indicated that they are eager to come back to work.”
Even with some employees choosing not to return to work due to childcare or health conditions, businesses are not feeling the pinch.
“Largely operating at reduced capacity and bandwidth, they have enough staff to be successful,” Minges explained.
A business that had just reopened just in March after undergoing a year and a half of repair work following Hurricane Florence only to be shuttered again because of COVID-19 is The Savannah Inn in Carolina Beach.
“Hurricane Florence destroyed me. It was a huge, devastating loss. But once we got all 22 rooms back up and running, we were shut down for COVID,” owner Susan Riggs said.
Hundreds of thousands of dollars of Riggs’ own savings and retirement were spent to rebuild the inn after “massive” damage from the hurricane. She said she is currently seeking legal counsel to deal with her insurance company “who paid for nothing.”
Just as she planned her grand reopening, the pandemic shut her down again, and Riggs had to lay off all her employees for two months, some of whom have chosen not to return due to childcare issues and making more, currently, on unemployment, according to Riggs.
Now, back operating at full capacity, Riggs is busier than ever and working hard to keep up with the strict cleaning schedule she has put into place.
“We went from zero to 60 overnight. We had nothing; now we’re slammed,” Riggs said. “I do not know what to base the summer on since it is nothing we have seen before, but we are crazy busy and after a year and a half, it is finally good to be back. I think it’ll be a good summer.”
Riggs credits local and state officials for providing support and communication throughout the pandemic shutdown.
“All my elected officials have just been tremendous, and I wouldn’t change a thing. They have been great and have been the best support network,” Riggs said.
She said her heart goes out to those businesses that haven’t been as lucky.
“It pains my heart that small businesses like myself are still closed and that kills me. It is devastating,” Riggs said.
One business that continues to be successful and sees growth despite the pandemic is Palm Air Realty in Kure Beach.
“We’re not having any challenges,” said Anne Brodsky, owner and guest services manager. “We applied and received some money and we kept our employees working, and now we are looking for more people to hire.”
Despite having to cancel thousands of dollars in reservations, Brodsky said she is proud to note, “We walked away with happy customers who were reassured that thanks, in part, to my compulsive behavior, we can ensure our properties are clean and comfortable.”
Palm Air Realty hired five additional staff members for cleaning crews to make sure customers feel comfortable visiting.
“We have been impacted, but we are extremely optimistic that a new balance is going to come,” Brodksy said.
She said many guests no longer can afford a full week at the beach, so Palm Air Realty has chosen to be flexible to suit their needs.
“So that they can get down to the ocean and feel that sun,” Brodsky said, “and get back to feeling comfortable within your skin.”
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