Business

How seasonal businesses stay afloat when their customers have gone away

The Carolina Coffee Shop and other businesses in this East Franklin Street building, plus two buildings to the right, could be demolished sometime in the next decade, according to UNC’s campus master plan. The buildings could be replaced with two four- and five-story office and commercial buildings.
The Carolina Coffee Shop and other businesses in this East Franklin Street building, plus two buildings to the right, could be demolished sometime in the next decade, according to UNC’s campus master plan. The buildings could be replaced with two four- and five-story office and commercial buildings. Mark Losey

Business is booming at the beach right now, but not on Franklin Street.

To be successful, seasonal businesses, such as retail and restaurants in tourist areas and in college towns, have to make all of their money for the year in a shorter time period.

For Franklin Street, near UNC-Chapel Hill, business dies down significantly over the summer months, as well as other school break periods. For coastal towns, business slows down from the fall to the spring.

Hops Burger Bar recently closed its Franklin Street location, making it the third restaurant to close in the 140 West building in three years, the News & Observer previously reported.

The restaurant was open for less than two years.

“Chapel Hill didn’t meet our brand standards,” co-owner Chris Martin told the N&O. “It’s a hard place to make it. ... We like Chapel Hill, but our model didn’t work right there.”

Tama Tea, which recently closed its Chapel Hill location, also had the challenge of doing business on Franklin Street.

Rocco Quaranto, owner of Tama Tea, said the business had to try to “keep a war chest” to stay afloat during school breaks.

“You have to make all of your money for the entire year in about nine months,” Quaranto said. “There’s two months for the summer and a month for Christmas that Franklin Street kind of shuts down.”

Tama Tea has locations in downtown Raleigh and Wilmington, and Quaranto said those locations don’t face the same problem.

Hops has two locations in Greenboro, where the company is based, and one soon to open in Winston-Salem.

Saravanan Kesavan, associate professor at UNC’s Kenan Flagler School of Business, said very few areas of business are immune to the problem of shifting consumer demand.

For seasonal businesses with uneven customer demand patterns, Kesavan said it’s important to pay close attention to costs that can be lowered, like labor and inventory.

The off season for these businesses is like an animal’s hibernation period, he said.

At Perennial Cafe on Franklin Street, owner Mimi Hock said that during the summer less staff work at one time, which helps cut costs. The cafe is also able to order less supplies, since fewer customers are coming in.

Hock said she has toyed with the idea of closing for a period of time during the slow summer months, but decided not to go through with it.

Kesavan said there are many problems with the idea of a business closing during its off season. Although it would save labor and inventory costs, there would still be rent and other expenses. It also might hurt the reputation of the business, and cause workers to go elsewhere, he said.

Abbie Sinclair, who owns the Ocean Grill and Tiki Bar at Carolina Beach with her husband, David, said that in addition to cutting back on staff during the off season, they also cut back on hours.

Starting in the fall, Sinclair closes the restaurant an hour earlier. After daylight saving time ends in November, the restaurant closes after lunch Monday through Wednesday.

Later into the winter, the restaurant closes all day on Monday and Tuesday, typically the slowest days.

Sinclair said they’ve thought about closing the restaurant entirely during the winter months, which she said would make the most financial sense. However, they have many longtime staffers they would like to keep employed, she said.

Ocean Grill also tries to promote different food specials to get customers to come in during the slow periods. Most restaurants on the island do that as well, Sinclair said.

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