Fly fishing

Fewer small businesses are opening in SF The pandemic is only part of the problem

Erik Anderson’s love for craft beer and his years in the restaurant and bar business have driven him to take risks during the pandemic. He opened his own bar and restaurant, Barley, on Polk Street near the edge of the Tenderloin in early 2021.

He knew the risks of opening during a pandemic, taking out a loan for a small business and putting in money he had carefully saved over the years. But it was worth it. He wanted to create a space where customers could grab a craft beer or choose a charcuterie platter and forget their worries, if only for a moment.

After more than a year, Barley is still open and Anderson is still able to pay its staff. But it has been difficult, opening during the winter when vaccines were just starting to become available and statewide critical care availability hovered around zero. Foot traffic in the city was also down, with many people sheltering in place as a holiday-driven virus wave swept through the state.

At times, Anderson’s passion for hospitality and good beer seemed to be the only thing driving him.

“When we first opened, we had about 10% to 15% of expected sales,” Anderson said. “When the cards are completely against you, when you can’t serve customers, when you’re bleeding capital reserves, what gets you out of bed?”

For many entrepreneurs, the answer was simple: nothing. The latest data from the San Francisco Comptroller’s Office shows that business openings in the city continue to decline, with few exceptions, during the pandemic.

Barley was just one of 70 bars and restaurants that opened across the city in January 2021, down from 108 the previous January and 139 in January 2019.

In December, the most recent month for which data is available, only 40 food and drink establishments opened, with retail businesses following a similar long-term downward trend with occasional upward spikes.

These numbers come as the pandemic in the Bay Area has entered a somewhat more hopeful phase. Statewide mask mandates are lifted in most indoor public spaces on Feb. 16 — San Francisco and most other Bay Area counties are expected to follow suit. But with telecommuting so entrenched in the local economy, that probably won’t immediately translate to more people sitting on bar stools at neighborhood watering holes like Barley.

“We can only rely on our local regulars,” Anderson said of his thirsty Polk Gulch neighbors. “We need tourism and office workers.”

San Francisco’s tourism recovery is also lagging other major urban tourist destinations in the United States, according to the comptroller’s report, as hotel occupancy rates have trended lower across the city since last month. last. And while some of that is due to seasonal patterns, the data shows half the pre-pandemic average of 80% occupancy.

Office footfall was below the 10% mark citywide at the start of the pandemic, but had rebounded late last year, according to city data, before the omicron push hit. again dropping that number. Some workers have returned to the office, but at levels about half of what they were at the end of the year.

“I know from our members in the chamber that you’re going to see them return to office starting in February, March and April,” said Rodney Fong, president and CEO of the San Francisco Chamber of Commerce.

Still, office real estate vacancies have continued to rise since the start of 2020 in San Francisco, the comptroller’s report says, noting that many businesses are cutting back on a major expense they may not need. long-term. And while some office workers are returning, the general trend, according to a recent federal report, is toward more and more permanent remote work.

Even as the office crowd returns, some of the city’s most high-profile and often overstated challenges are making it harder for landlords like Anderson to make money.

He said he built a small park last year in the driveway adjacent to Barley, complete with televisions, speakers and plants. Patrons entered the outdoor space to sip craft beer and watch the Superbowl last February. But two months later, it was in poor condition.

Anderson said he should clean it every day, rinse the droppings and sweep up the needles. Once it caught fire. Eventually, someone overdosed and died in space, he said, and he shut it down.

“Things were so tough,” Anderson said. “I was working 60, 70 hours a week with a small child at home.”

Bar patrons react to an answer during a quiz night at Barley Bar in San Francisco. The bar opened during the pandemic and faced challenges to open and stay open. Owner Erik Anderson said events like quiz night help them stay solvent.

Carlos Avila Gonzalez/The Chronicle

A tent camp in the alley has also developed, he said, although most of the residents cause him no problem and he knows many of them by name.

The Mayor of London Breed recently briefed the city’s Board of Supervisors after an out-of-state trip and said his talks with business leaders focused on issues including property crime, surging housing costs, homelessness and the opioid epidemic, which are impacting how people see the city.

Some business owners have also complained about San Francisco’s lengthy and costly process to obtain proper licenses and inspections before they can open, although the city has taken steps to relax some of its rules during the pandemic.

Early last year, Mayor Breed passed legislation providing $5 million in fees and tax exemptions for small businesses hardest hit by the pandemic, including bars and restaurants. Breed also introduced a ballot measure earlier in the pandemic aimed at reducing bureaucracy in the permitting and inspection process, and modernizing zoning along the neighborhood’s commercial corridors.

The city also delayed a tax for vacant storefronts in certain business districts, which excluded Union Square and the Financial District, but the moratorium expired last month.

For some business owners like Steve Mayer, owner of Grant Avenue’s French mainstay Café de la Presse, the changes haven’t made enough of a difference.

Mayer said another business he is setting up and managing, Superfine Kitchen, located in the downtown Russ Building, is designed to meet the needs of office workers, but he expects the permitting process and inspections to take about three months before it is fully operational.

“It’s a street fight every day between the cost of employees, the lack of people downtown, government regulations and COVID,” Mayer said.

The opening of fewer restaurants and retail businesses also means a fundamental change in the composition of a neighborhood, said Fong, president of the chamber.

“In San Francisco, part of its cool quirk is that you had businesses whose storefronts were open due to their [owners’] passion,” Fong said, referring to everything from a costume shop on Haight Street to a downtown fly-fishing shop. These types of stores define the neighborhoods they inhabit, he said.

This passion is an enduring trait for small business owners like Anderson, the bar owner.

“I believe in the city for the long haul, I believe in its heart and soul,” he said, noting the importance of a city’s small business economy to its cultural and other diversity.

“I will stay here and keep fighting.”

Chase DiFeliciantonio is a writer for the San Francisco Chronicle. Email: [email protected]: @ChaseDiFelice