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VOL. 126 | NO. 29 | Friday, February 11, 2011

Gone Cold

Winter weather stymies local businesses’ bottom lines

JONATHAN DEVIN | Special to The Daily News

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School children welcomed Jack Frost on Wednesday afternoon and the three to five inches of snow he brought with him, but for business owners, the snow that caused hazardous road conditions and closures across the city also caused dollar signs to melt like icicles in the sun.

Kenneth Welch, right, clears snow off the pavement outside Smokers Outlet at Main and Madison. Most Downtown businesses closed early during Wednesday’s snowstorm. (Photos: Lance Murphey)

Many Memphis business owners were just glad it happened well before the weekend.

“My (showings for) retail property are nonexistent today,” Griffin Elkington, principal broker for River City Land Co., said Wednesday as snow fell throughout the area. Elkington specializes in residential sales of new construction and REOs (real estate owned homes, typically by a bank).

“I can tell you right now that this weather brings construction to a screeching halt when temps go below freezing. When you’re bricking a house, or pouring a slab, or setting stone, it’s all completely nullified.”

Elkington had a home showing scheduled for 2:30 p.m. on Wednesday, the same time that most schools and businesses decided to close for the day. He decided to cancel as well.

Michiganradio.org, an NPR affiliate, reported earlier this month that according to IHS Global Insight, an economic analysis firm that attempted to calculate the economic damage caused by severe weather to that state in January, employees suffer direct economic losses. Those losses are due to lost wages during snow storms, which is then compounded, sometimes tripled by businesses’ loss of retail revenue and states’ losses of sales tax. For Michigan, that meant a loss of $251 million per day.

In Memphis, it’s been a long time since snow caused business closures of more than a day or two, but the weather factors in.

“I have salaried staff so it’s a given that I’m going to lose money on a night like this,” said chef Ben Smith, who owns the Midtown restaurant Tsunami along with his wife, Colleen. “The major decision is whether or not I make the call early and cut my losses or try to stay open and try to cover labor. Often you don’t recoup those losses.”

Other bars and restaurants that have stayed open during this winter’s other snow events, such as Downtown’s South of Beale, made the decision to close Wednesday evening.

“Super tough decision, but to ensure our staff doesn’t have to be on the roads, we will be closed tonight,” the restaurant’s owners tweeted that afternoon.

Restaurant dollars likely end up at the grocery store, which may see a shift in traffic due to the snow, but little effect on their bottom lines.

“We’ll see an increased demand for staple items – the milk, the eggs, the bread, the bananas,” said Paul Simon, spokesperson for the Schnucks corporate office in St. Louis.

“We’ll see an increase in sales the day or two before the big storm, but it’s really just a shift. The day of the storm our business may drop because people don’t want to leave their houses.”

The chain rarely closes due to weather and some employees may get extra work keeping shelves stocked with in-demand items after a storm.

“Typically we weather the storm, no pun intended,” said Simon.

The same is true of banks, which offer most walk-in services online these days. But unlike grocery stores, there’s no pre-storm demand for loans and mortgages.

A man clears snow off the street near the Marriott Residence Inn Downtown on Monroe Avenue during Wednesday’s snowstorm.

“In today’s day of the Internet and electronic banking, a lot of business can be carried on as usual,” said John Oxford, director of external affairs for Renasant Bank, whose Memphis branches closed early Wednesday. “Does it slow down retail traffic, yes, absolutely, but it doesn’t put anything to a halt as far as operations go.”

The banking industry is used to smaller retail numbers in the winter with a rebound in spring. Nonprofits can’t wait that long.

“We see a significant decrease in the amount of blood we collect (during snowstorms),” said Jason Sykes, director of marketing for Lifeblood, whose donors centers also closed at 2 p.m. Wednesday.

“What’s happening today will affect our operations for several days, because when a person does get back into the routine, they’re behind at work or they have to stay home because the kids’ schools are out. Donating blood gets bumped down on the priority list.”

Lifeblood starts early in winter reminding donors to stop by before the weather gets rough.

“I’m just thankful we don’t have a show tonight,” said Debbie Litch, executive producer of Theatre Memphis, which just opened its production of “Amadeus,” and which had a recent performance threatened by the last snowfall. “We take it day by day and show by show. We do not follow the city or county schools, we just wait and see who can make it in.”

If worst comes to worst, there’s insurance against extended closing of a production, but she’d rather avoid that if possible. Bad weather almost cancelled the final Saturday night performance of their highly acclaimed February 2009 production of “Cyrano,” but Litch said her employees decided the show had to go on.

“We had all hands on deck early in the morning shoveling the parking lot,” said Litch. “We made sure that it was safe for our patrons and escorted those that might need help coming in.”

Business insurance, after all, comes with high deductibles, making it a last resort for most.

Mohamad Hakimian, co-owner of The Madison Hotel Downtown, said he too would rather roll up his sleeves.

“Our guests are really at the mercy of the weather,” said Hakimian on Wednesday. “Some guests left earlier this morning and we also have a few cancellations tonight from guests who were coming tonight.”

But others were forced to stay put for an extra day, which may help supplant the cancellations, even as staff work extra hours or spend the night in the hotel themselves.

Some workers throughout the city might have made the decision to stay in a hotel instead of take their chances on the road. For example, Chris Vernon, host of the Chris Vernon Show on 730 AM Fox Sports, tweeted Thursday morning that he and show producer Jon Roser had decided to stay the night in the Westin Memphis Beale Street, which is next to the station’s Beale Street studios.

It’s not known how much economic damage was caused by business closures on Wednesday and even Thursday, but the IHS Global Insight Report concluded with one item that business owners might agree with. “The economic impact of snow-related closures far exceeds the cost of timely snow removal,” stated the report.

Then again, there’s always a silver lining, said Smith.

“Right now I’m looking at a glass full of fresh fallen snow that my wife gave me and just drizzled a big measure of Johnny Walker Black Label on it,” he said. “I’m not complaining right now.”

PROPERTY SALES 81 277 20,909
MORTGAGES 85 329 24,074
BUILDING PERMITS 219 672 43,265
BANKRUPTCIES 64 238 13,418