Taking risks during the downturn starts to pay off for local businesses
By Jenn Abelson, Globe Staff | March 28, 2010
They were last year’s risk takers. They opened doors while others shuttered them. Call them crazy — many did — for expanding during the worst downturn since the Great Depression.
Now, a year later, these five bold New England businesses are still standing. In almost every case, they have been rewarded for their decisions. And they are pretty pleased with themselves.
“It was absolutely the right move. We gained market share and saw sales grow,’’ said Chris Cheek, vice president of franchise development for Bruegger’s, the Vermont bagel chain that opened 16 shops last year and acquired a Canadian company with 125 restaurants. “A lot of competitors were hunkering down and closing. We weren’t fearful of the economy. It was the right time to grow — not to retreat.’’
For many New England companies, 2009 was a year they’d like to forget. They spent months slashing jobs and employee benefits, slicing operations, and figuring out how to survive. But several businesses embraced the recession as an opportunity not to be missed. Major store closings opened up prime real estate, and struggling landlords were willing to negotiate rents, even at coveted addresses on Newbury Street. Massive layoffs created an ample supply of talented workers, and the falloff in demand for construction made it cheaper to build new enterprises.
“The lesson learned is that opportunity always exists, even in tough times,’’ said Madison Riley, a retail analyst with Kurt Salmon Associates, a consultancy in Boston. “For established businesses and start-ups, it was a great time to make investments.’’
It wasn’t always easy. Karen Blom, co-owner of Zoar Outdoor in Charlemont, last year considered delaying a $600,000 zip line project called Deerfield Valley Canopy Tours. Instead, she pressed ahead, betting the adventure company could capitalize on people vacationing closer to home. A year later, Blom knows it was the right move. More than 7,000 people visited the canopy tours — about 2,000 above projections. And the company, despite lowering prices to $80 from the $100 it initially planned, was able to make its loan payments and turn a small profit.
“It was scary. We had a lot of sleepless nights,’’ Blom said. “But in the end, it all worked out perfectly. And I’m feeling way more confident this year.’’
Even as car sales plummeted about 20 percent and other dealers closed up shops, auto magnate Herb Chambers kept expanding his empire. He added four dealerships, including the most recent, a Kia dealership in Burlington. As he strolled the floor of the new shop recently, Chambers, looking tan and relaxed, boasted that he had stolen business from competitors and saved up to 15 percent on construction costs by building after prices had plunged.
When he spotted a car with rival Quirk Auto plates getting a new transmission at his Kia dealership in Burlington, Chambers stopped and smiled: “It makes my heart flutter when I see other dealers’ cars here. It makes you feel like you’re winning the game.’’
And he isn’t slowing down. Chambers is adding Cadillac and Hyundai to his stable for a total of 48 dealerships by year-end. The investments, he says, will pay off in the long term and allow him to increase his grip on the market when the economy recovers. Cautious consumers who are postponing purchases of new vehicles are creating pent-up demand for the next year or two as repairs become too costly or autos break down for good.
“We are really happy with what we did,’’ Chambers said.
On Newbury Street, the Swiss boutique Nespresso has found its groove selling espresso machines to consumers who want to save money by making the beverages at home. The upscale merchant had long coveted a spot on Newbury Street and grabbed the location after it was vacated by Domain Home, a home furnishings chain that went bankrupt. The Boston shop — open and doing well, according to a Nespresso spokesman — was one of two the retailer launched last year, and another three boutiques are planned this year for Miami and New York.
Several European merchants have followed Nespresso’s lead and filled empty storefronts on Newbury, where rents are down significantly. But a few blocks over, Downtown Crossing is still ground zero for the recession. The massive redevelopment of the Filene’s site has been a hole in the ground since financing fell apart, and beleaguered businesses have continued to close up shop.
William Ashmore, however, is busy trying to launch his second restaurant in Downtown Crossing, Stoddard’s Fine Foods & Ale. He had hoped to open up last April, but a litany of unexpected construction problems — the ceiling was caving in, the ventilation was insufficient, a second elevator was needed — pushed back the project and doubled the cost. Ashmore, who is an owner of the Ivy restaurant across the street on Temple Place, is approaching his 70th consecutive week of construction and preparation for the venture, styled after a pre-Prohibition pub with 25 beers on tap, a shoe shiner, and other period details.
“I’m pretty . . . nervous because we’ve bitten off a lot,’’ he said.
But Ashmore says he feels lucky that the delays saved him from opening in the worst of the recession, and gave him time to build up hype around the restaurant. Plans for a private men’s club caused an unexpected brouhaha with the National Organization of Women, and passersby keep banging on the door asking for tours and the opening date. (Maybe this week?)
When he’s not feeling the pressure of fulfilling all the promises he’s made, Ashmore, who lives in the apartment above Stoddard’s, is feeling good about the days ahead. He’s already making plans for a third restaurant in the neighborhood, a Neapolitan pizza shop, and believes Downtown Crossing has a future.
“I’m more optimistic now than I was a year ago,’’ Ashmore said. “I see how everything is finally coming together.’’
Jenn Abelson can be reached at email@example.com.