With PPP loans and students on campus, local businesses are cautiously optimistic
For the last 10 months, once-busy weekdays in downtown Princeton have felt more like sleepy Sundays. Over the course of the pandemic, many local businesses have been operating on a loss, some have shut their doors for good, and all have had to make painful decisions to cope with bleak economic circumstances.
This month, however, some local businesses feel hopeful. As national COVID-19 infection rates drop, many stores are also receiving a second round of Coronavirus Aid, Relief, and Economic Security (CARES) Act Paycheck Protection Program (PPP) loans, giving them a vital boost after several disastrous quarters in 2020. In addition, businesses are seeing an uptick in sales as the 2,887 undergraduates that have returned to campus begin to venture out of the Orange Bubble once more.
The Daily Princetonian checked in with six local businesses to discuss rebound after the hardships of the spring, a continued need for economic lifelines, and a call to action for the Princeton community.
“No roadmap”: after economic shutdown in the spring, businesses regroup
Last August, the ‘Prince’ reported that while local Princeton businesses received over $200 million in their first round of PPP loans, many were still struggling to survive due to New Jersey public health mandates and the absence of students on campus.
“If it weren’t for the PPP loans, we would probably have to close one of [our branch stores], probably Nassau, and lay off all its staff,” said Jim Sykes, president of the U-Store, in an interview with the ‘Prince.’
Back in March, the branch on Nassau Street did have to close, albeit temporarily, while the one on University Place — deemed “essential” because it sells food — remained open from 10 a.m. to 6 p.m. These hours were severely reduced from the University Place branch’s pre-pandemic business hours, 8 a.m to 4 a.m.
As the University all but closed its gates to visitors, the U-Store missed its usual spikes in business. The cancellation of Princeton Preview and Reunions as well as the elimination of the Single Choice Early Action admission cycle meant the loss of the usual flurry of gear purchases by just-admitted students.
“Everything Princeton does affects us,” Sykes said.
To stay afloat, the U-Store applied for and received $330,000 in first-round PPP loans, according to Sykes. The loan went towards covering payroll costs, rent, and utilities.
Other stores have experienced similar revenue losses. Small World Coffee, which has stores on both Witherspoon and Nassau Streets, saw a 40 percent reduction in sales in 2020. Last March, the coffee shop closed both its locations and temporarily laid off 45 of its 48 employees.
“It was a very surreal time with no roadmap,” co-founder and co-owner of Small World Coffee, Jessica Durrie, said.
“I cried that day. Laying off my staff was one of the saddest days of my life.”
After the full closure, Durrie set out to reopen Small World Coffee in stages. The Nassau Street location reopened first, with online ordering and bulk pick-up three days a week, which expanded to include beverages and items from their grill. The other location on Witherspoon Street reopened three months after the closure.
Small World Coffee received its first PPP loan on April 17.
“I submitted it and money just appeared in our bank account,” Durrie said. “It was so weird.”
Data released by the Department of the Treasury indicates that Small World Coffee received between $150,000 and $350,000 last year. Durrie credits this loan with allowing her to rehire many staff members “with confidence.”
A second lifeline
Though many small businesses in Princeton and across the country thank the first round of PPP loans for helping them avoid closing their doors during stringent lockdowns last spring, their difficulties have not fully abated. When applications for a second round of PPP loans opened last month, many Nassau Street businesses jumped at the opportunity for further relief.
The first round of loans actually encompassed two funding cycles: one in the first two weeks of the pandemic, and an additional input in April after the first was depleted almost immediately. Now, after a third round of funding for a second loan opportunity, the total sum doled out nears a trillion dollars.
The U-Store has already applied for and received around $300,000 — similar to the amount they received in the first round.
“We are surviving, I think that’s the best way to put it,” Sykes said. He added that PPP loans have provided aid in a year when profits were regularly down 50 to 60 percent compared to 2019.
Durrie has not received money from the second round yet and declined to disclose how much Small World Coffee was applying for. As with the first round of loans, she plans to use the money for payroll and fixed costs such as rent.
Small World Coffee is currently operating with a total staff of 28, up from three in mid-March of last year. Durrie said she hopes to be able to open indoor seating in the cafe soon.
However, she does not have any plans set in stone, as “one thing COVID has taught me is to not plan too far ahead because things are changing all of the time.”
In the meantime, Durrie and her co-owner Brant Cosaboom have arranged for pharmacists to come into both cafe locations once a week to test their entire staff.
Thanks to the first-round PPP loan, Jon Lambert — owner of the Princeton Record Exchange (PREX) — was able to retain all 18 of his original employees. Though they are currently seeing anywhere from 100 to 300 customers a day, they are still applying for a second-round loan — this time for “roughly $110,000,” or around 25 percent less than they received the first time around.
The owner of Jammin’ Crepes, Amin Rizk, told the ‘Prince’ that his second-round PPP application has been submitted and is waiting for approval “any day now.”
Despite the fact that undergraduates have returned to campus, Rizk said that the loan is still much needed to get them “through the winter season, with all the impacts [and] limitations” in their industry, including added costs required to adhere to health and safety guidelines.
The application cycle for the second loan has yet to close, and some businesses are still weighing their options. McCarter Theatre, one of the recipients of the largest PPP first-round loans last year at $1.2 million, wrote in a statement to the ‘Prince’ that they are currently deliberating whether to apply for a second loan or pursue other funding options.
“Life comes back to town”: Undergraduates return to campus
While the long-awaited return of students to Princeton may not be enough to allow these businesses to survive without extra loans, the return has many owners feeling hopeful.
For Lambert, though students do not comprise a significant portion of PREX’s customer base, he is “cautiously optimistic.”
“There are signs that are very encouraging,” he said, explaining that the “thousands of workers and visitors” that the University brings generate considerable foot traffic.
Lambert even noted that his sales are actually better on some days than last year — a welcome surprise. He attributed better-than-expected sales to customers working flexible schedules from home and a lack of “competition for entertainment.”
“We’re a fun thing to do,” he added. “It’s relatively safe and relatively inexpensive.”
In late January, as students got out of arrival quarantine and began shopping again, Sykes began to see some hopeful signs.
“Certainly business was significantly better than it had been,” Sykes said about the U-Store. He noted that the branch on University Place is selling seven times more food now that students are back on campus. Still, with tourists and visitors “few and far between,” Sykes predicts that the next few months will continue to be difficult.
“The pandemic has affected our business dramatically and continues to affect it, even with the return of the students,” he said.
Durrie also indicated she was delighted to have students back on campus, both from an economic and a personal standpoint.
“We opened Small World Coffee in Princeton largely in part because of the University, so it’s good to have you all back,” she said. “The town is just not the same without you all here.”
“It’s more like a black and white movie when the students and the University aren’t in session, and when the students are back and the University is in session it sort of goes to Technicolor, like in ‘The Wizard of Oz’,” she added. “Life comes back to town.”
In a world gone virtual, businesses follow
Business owners can’t rely fully on external changes — PPP loans and students returning to campus — for an improved future. Since the onset of the pandemic, they’ve had to drive improvements from within and get creative with online solutions.
As Lambert and his staff at PREX rushed to move their inventory online after their store was shuttered last spring, online sales went from one percent to six percent of their original revenue. Now that they’re open, Lambert said that they’re down to three percent, which is still considerably more than they were doing pre-pandemic.
With an acceleration of the shift towards e-commerce brought about by the pandemic, co-owner of Labyrinth Books Dorothea von Moltke indicated her bookstore is also investing a considerable amount in its website and online presence. To her surprise, this shift granted her some unexpected advantages.
“We miss the in-person conversations and gatherings very much, but at the same time have also found the possibility of reaching larger audiences who can join from anywhere to be an exciting one,” von Moltke said.
As in-person programming for theaters and performance centers across the country ground to a halt, McCarter Theatre — like many others — transitioned its events online. They co-produced a virtual play festival celebrating the work of playwright Adrienne Kennedy and, on Feb. 18, they premiered a new digital production entitled The Manic Monologues.
While looking forward to possibilities of outdoor, in-person programming in the spring, artistic director Sarah Rasmussen wrote to the ‘Prince’ in an email that online theatre alternatives are here to stay.
“We do expect that virtual, digital programming will be a part of McCarter’s work for the future — as will remote working opportunities for artists and staff.”
Looking to the future: “Will the buy-local spirit survive?”
The spring looks brighter than business owners said they thought — they all noted that the trials of the pandemic have produced unexpected silver linings.
“I think our community is more connected now than it was pre-COVID,” Durrie noted. “Local businesses have banded together and shared knowledge and resources freely.”
Durrie expressed gratitude for the support Small World Coffee received from the University’s Small Business Resiliency Fund and from Tigers for Nassau, a student-driven group that assisted the store with updating its point-of-sale system, allowing the store to do “online ordering in a much more elegant way.”
In addition, Durrie is currently working on an art sculpture installation — something only conceived of given that pandemic restrictions have restricted in-person seating. She hopes that these will “add whimsy and creativity during this really dark time.”
Von Moltke said that this past holiday season, local businesses partnered together to promote shopping local, which came in the form of discounts to bookstore customers who could show that they had shopped at other businesses in town “as a way to reward those who were spending their money locally.”
“We really have been buoyed by the often imaginative ways in which people are responding to the call … to support the local businesses where you live,” she explained. “People are acting on knowing that 68 [cents] of each dollar spent locally stays in the community, whereas none of the money spent online benefits our neighbors.”
Even still, the fight is far from over. Von Moltke maintained that even more than PPP loans or creative digital innovations, small businesses need a renewed commitment from their communities.
“Will the buy-local spirit survive?” von Moltke asked. “That would be an incredible boon — in fact, I would say it’s the most important condition for a sustainable recovery — and we plan to keep making the case that folks need to support what they value if they want to see it last.”
Editor’s Note: A previous version of this article stated that Small World experienced a 40 percent reduction in profits rather than sales and misidentified the artistic director of McCarter Theater. The ‘Prince’ regrets these errors.