Noe Valley Voice November 2008

Merchants Hold Out Hope for Happy Holidays

By Lorraine Sanders

The white holiday lights are twinkling along 24th Street and Church Street, and Noe Valley merchants are readying themselves for the weeks ahead--ones they hope will be filled with the season's traditional pastimes of shopping, eating, and merrymaking.

"It sounds like a small thing to string up some lights, but all of a sudden, the first night they came on, this dark corridor of Church Street, it was lit up, it was cheerful, it was beautiful," says Lynn Ingham, owner of Lynn Antiques and a founding member of the Church Street Professionals organization.

Trouble is, a national economic crisis, added to a deepening recession, has stymied hopes for an end to the stagnant sales of last summer. Instead, many merchants are wondering just how bad things will get.

"People are just treading water. Nobody knows how to prepare for what's coming because we've never seen anything like it.... It's like you're in a river, and someone's just told you there's a huge waterfall in front of you," says Gwen Sanderson, owner of Video Wave and co-president of the Noe Valley Merchants Association, which helped put up lights in all corners of the neighborhood.

The suspense is enough to rattle the nerves of even longtime business owners.

"It's definitely something I worry about, having been through the whole 2000 to 2002 debacle, where we noticed a serious loss of business and we had to do some pretty aggressive marketing to build it back," says Brad Levy, whose 24th Street restaurant Firefly celebrates its 15th anniversary on Nov. 3. At its lowest point, he estimates the restaurant saw sales volume drop between 40 and 50 percent during those years.

Still, Levy says, it's too soon to tell whether the occasionally slow night at Firefly is the result of the national economic downturn or just part of the late-September to mid-October lull many business owners experience.

"It's hard to even say if there's been any effect yet. Historically, past Labor Day, there's a little slump as we gear up for the holidays," he says.

Firefly Fixed the Prix

What Levy is sure about is that costs are on the rise for local restaurants and have been for several years.

"Our bottom line is evaporating," he says, matter-of-factly.

Along with the escalating costs of food, especially premium items like the sustainably-farmed fish Firefly serves, the last few years have saddled small business owners with vendor-imposed fuel surcharges, increased employee healthcare costs, and higher minimum-wage requirements.

The solution? Raising prices, of course. Most recently, Levy says he raised prices 4 percent across the board to match the increase in health-insurance costs since the city's healthcare ordinance passed two years ago.

A silver lining for the restaurant's customers? Levy decided not to raise the price of Firefly's popular weeknight prix fixe menu, which offers an appetizer, entree, and dessert for $35 a person.

"If the situation were better financially, we would probably have raised it, but we've been holding that down. Our other prices have increased, which makes it an even better deal. A lot of people appreciate that for weekday dining, which is the first thing that drops off when people are thinking about cutting costs," he says.

Luckily for Firefly's employees, Levy says he doesn't anticipate having to cut staff anytime soon.

Layoffs Off the Table

Nor does Steven Baker, owner of Chloe's on Church Street, another longtime favorite among local residents.

"I would rather sell the business than lay off staff. They are like family. The staff tells me what to do, all the different things it takes to help run the business," says Baker, who opened the cafe with wife Melania Kang in 1987. Back then, a breakfast with two eggs, toast, and fresh fruit went for just $3.95, compared to today's $6.15.

These days, the main challenge is the rise in the cost of ingredients.

"Where we feel it is when our vendors say the price is going up.... Over the course of last year, every vendor has added a gas charge," he says.

The increase in key products like flour prompted Baker to raise Chloe's prices by 25 cents last spring.

"We held on for as long as we could," Baker says.

Loyalty Helps

While restaurants are feeling the pinch from increased employee and product costs, the situation among retail businesses in the neighborhood is more of a mixed bag (pun intended). At least two longtime local businesses, Streetlight Records and Noe Valley Video on 24th Street, have opted to close their doors.

For others, the effects of the economic downturn range from mild to major.

"We haven't noticed a big drop in anything. We attribute that to the strong support of the community. They seem to have a real consciousness of making the effort to buy locally," says Marcy Israel, who opened Wink SF with co-owner Teresa Hagiya in 2005.

Although their 24th Street store hasn't suffered, Israel says the owners have adjusted rates at their photography business, I Do Photos.

"We have really tried to discount our pricing to help people in this climate, to make it more reasonable for people," says Israel.

Walking and Nesting

Whether it's portraits for the family or regular dog walks, services seem to be taking a bigger hit in the neighborhood.

Slow business prompted Noe Valley Pet Company owners Paula Harris and Celia Sack to sell their Church Street pet store's dog-walking service to independent provider Top Dog in September.

"When people are feeling the crunch of the economy and feeling strapped for economic reasons, the first thing they cut out really is services--the personal trainer, the dog walker, the massage. We were feeling a little bit of that. That business was not growing," Harris explains.

In the store, however, sales have been strong despite rising costs in pet food.

"We haven't felt much of a slowdown. Actually, it's been a little more brisk. I think people are walking around the neighborhood more," says Harris, who partially attributes the phenomenon to residents' increased interest in pursuing alternate means of transportation, like walking and biking, instead of driving.

Lynn Ingham agrees. "A lot of people are nesting again. Like after 9-11, a lot of people sort of nested for a while and really thought about what's important, and shopping locally is one of those things that's really important," she says.

Shops Try to Keep Smiling

Other small retailers are feeling increased pressure.

"It's actually been really hard the last two months. The first few months, I was doing so well, so I think it has to do with the economy," says Camille Seiberling, who opened Mabuhay children's boutique on Church Street last spring.

During her first four months in business, Seiberling says, sales exceeded her expectations. Since then, they've fallen off, so much so that she reports barely breaking even in September and recently borrowed money from a family member.

"I'm really trying to be positive. Being a consumer, I know for myself right now we're just worried whether we have enough money for the holidays," she says.

Like Seiberling, Marie Biscarra, who co-owns the clothing shop ISSO (formerly Nisa) nearby on 24th Street, has felt consumers tightening their purse strings. But she is trying to remain optimistic.

"I think that everybody feels it. We feel a difference, especially within the past couple of months, but we are able to keep our doors open and our staff all on board," she says, adding, "but all you can do is do your best and stay true to who you are as a company and think of people in our own back yard."

Santa on Way to Noel Stroll

A bright spot for many neighborhood merchants in the dreary retail picture will be the annual Noel Stroll on 24th Street, scheduled for Dec. 13, 5 to 9 p.m. That evening, businesses will celebrate the season by hosting sales and special activities with holiday themes.

While carolers and local musicians entertain passersby outside the shops, children will be able to have pictures taken with Santa Claus at Zephyr Real Estate and listen to kid-friendly readings at neighborhood bookstores.

There will be wine and cheese tastings, traditional holiday foods, and plenty of opportunities to shop, says Sanderson.