Small businesses are closing down at an alarming rate, and it could get worse, economist says

Small businesses are closing down at an alarming rate, and it could get worse, economist says

ATLANTA — A lot of small businesses are giving up and shutting down as the COVID-19 pandemic continues.   

Many of those businesses, such as Camicakes on Peachtree Road in Buckhead, could not afford rent and are now getting evicted.

It was a sweet moment a decade ago when Camicakes opened its doors. Now, 10 years and a pandemic later, the gourmet cupcake show is closed.

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“Any business owner could probably tell you, or any entrepreneur, it’s a roller coaster. And when COVID hit, that roller coaster left the tracks,” Camicakes owner Andra Hall said.

The Buckhead location sits in a business area. The foot traffic disappeared when COVID-19 showed up, with a lot of people working from home.

“Business just stopped. The phone calls stopped. People started canceling orders,” Hall said.

Camicakes joins a growing list of small businesses shutting down, and economists say it’s only going to get worse.

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“The numbers are staggering from the National Federation of Small Businesses and the National Restaurant Association. They projected already 40% of all restaurants have already closed and given up,” said economist and real estate expert K.C. Conway. “How does a restaurant, or a hotel or a retailer operate when they’re deemed nonessential and can’t open or can only open 50%. Their business model means it doesn’t work.”

With no money coming in, Camicakes stopped paying rent in March while negotiating a new lease.

Selig Enterprises is the landlord.

“We offered her some free rent, significant rent relief. We offered her a lease extension. And she never responded,” Selig Enterprises Chief Financial Officer Jo Ann Chitty said.

“They really didn’t want to negotiate for the most part. So we decided to pull out,” Hall said.

That meant letting go of most of her employees — from 40 down to just eight. She closed up shop in Atlanta and decided to focus on her Smyrna location.

“What made this the most viable location for us is because it’s only a work community. So we have people who live above us and people who work in this plaza,” Hall said.  

When shops close up, property owners like Selig suffer, especially during this climate, with few new possible tenants to take their space.

Selig negotiated rent relief with most of its tenants, but eight — including Camicakes — are getting evicted.

“We were able to do it with 430 tenants. And it’s so unfortunate, you know, that we have just a small handful that just shut down their business. I mean, it’s heartbreaking. The last thing we ever want to do is evict a tenant. We succeed when our tenants succeed. And we’re very much invested in their success,” Chitty said.

Chitty said you should be invested too because small businesses are a vital part of any community.

“It’s our front door. It’s important for everybody,” Chitty said. “I mean, it would change the fabric of Atlanta if we lose a lot of our restaurants.”

But it’s already happening, with economists predicting a dire future.

“I think we are facing a W, which is a double-dip recession,” Conway said.

Selig reports it’s already down 25% from lost rents. 

“About 70% of our income comes from our retail portfolio,” Chitty said.  

Economists say the retail landscape is changing because of COVID-19.

“We’re buying different things. We’re not buying gas. We’re not buying a Starbucks coffee on our way to work. We’re not going to lunch,” Conway said.

And consumers are also not spending as much on cakes. But Hall is still baking and dreaming now of expanding in Atlanta.

“I feel like once all of this flows over, and we have a good foundation again, we’ll be back in and, I think, stronger than ever,” Hall said.

Both the tenant and landlord, in this case, say they need more federal help.

Camicakes got a Paycheck Protection Program loan, rehired some of its employees and opened a new location at Lenox Square.

Economists say without more federal aid, there’ll be more layoffs and corporate bankruptcies this fall and into the holiday season.

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