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Old 01-26-2011, 08:10 AM
2 posts, read 2,490 times
Reputation: 10


Hello Everyone,

I am small restaurant owner here in Louisville. I own fastfood joint since last three years in "Highlands" and "Downtown" area.

Both of my stores are in upper highlands (bardstown road) and downtown (market st) area.

I owned both fastfood restaurants since last 4 years, since 2007 to be exact. I have seen such a good volume of business in 2007, 2008 and 2009. However, sales has dropped dramatically from June of 2010 and it's ongoing.

I am starting wonder whether Louisville is finally hitted by recession? I just can't seem to see all the regular customers I used to seeing before.

I know Humana laid off 1400 workers and Jewish laid off 500 people. Could that have negative impact on highlands and downtown area? What other big employers laid off workers which could have created negative impact on small business owners?

Your input is greatly appreicated!!!

Struggeling Small Business owner here
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Old 01-26-2011, 11:04 AM
1,478 posts, read 2,221,926 times
Reputation: 1597
Not a local, but I've done economic work in the past for businesses, so I'll throw in my 2 cents. I pulled up Bureau of Labor Statistics info for Jefferson County over the last few years (presumably where the bulk of your customers live and are employed). They only have data through June 2010, so this won't entirely address your question about what has happened in the last half of 2010.

1-Unemployment rates are misleading as they miss people who have "given up" on getting a new job. It's better to look at the number of employed, especially in a county where the population isn't dramatically changing. Changes year to year (from June to June):

2007-08: down 1.7% 2008-09: down 0.5% 2009-10: flat

The unemployment picture had actually stabilized, but at a much lower level than 2007 and prior.

2-Taking a look at average wages (June to June every year):

2007-08: up 1.9% 2008-09: up 0.5% 2009-10: up 3.2%

Keep in mind that once inflation is factored in, 2007 to 2009 was actually a drop in purchasing power for workers. 2009-10 represents a modest increase of maybe 1%.

The takeaway here isn't that the economy had gotten worse there, it's just that it hasn't improved at all from the historical declines we've been seeing lately. People allot money for entertainment/discretionary items like restaurants based upon not just current personal financial levels, but what they expect in the future. Back in the beginning of 2009, it could very well be that your customers thought things would turn more quickly, so they didn't think they needed to tighten their belt. Fast forward a year and the unemployed are still unemployed and the employed only got a 1% real raise. The money is not growing as much as they had hoped. Compound that with stagnant/declining home values, resetting variable interest loans, etc and the trough is starting to run dry for a lot of people. They start to spend less to address their lack of saving over the last 18-36 months. There is a lag effect because people resist changing their spending habits. The same things happens in those layoff instances you're citing. Employers don't want to let people go, so they ride it out for an extra year. Finally, they get to the point where their hand is forced, and they make that round of cuts they've been dreading.

Another thing to look at are the big employers in close proximity to your locations. Have they been hit by recent layoffs? You need to understand your customers: where they come from, where they work, what they're doing instead of coming to you.

You're dealing with a micro environment in a fast food place that can't fully be explained by even Jefferson Co stats. It could be that a lot of your old customers are now unemployed. It could be that they are brown bagging it to save cash. It could be that a new joint down the street has taken some of your customers. It could also be that your business has slipped a bit in terms of quality compared to alternative. Talk to other local vendors, get to know your existing regulars personally to find out how they're doing, and at least some of the questions will be answered.

Good luck. I know it's not easy out there right now.
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Old 01-26-2011, 11:13 AM
2 posts, read 2,490 times
Reputation: 10
Hello Chicago76 - Thank you for prompt response and detailed analysis.

I search on google for local louisville economy and thus far I found these two sites which describes that in nutshell close to 7000 people got laid off from private employers in the year of 2010. Which is obviously not a good sign.


[url=http://www.bizjournals.com/louisville/news/2010/12/03/52-major-markets-post-job-gains.html]52 major markets post job gains; Louisville ranks 88th | Business First[/url]
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Old 01-26-2011, 11:27 AM
1,478 posts, read 2,221,926 times
Reputation: 1597
It's not a good sign, but it's not necessarily a bad one either. I can't emphasize enough the need to know where your customers are coming from. Those 7000 layoffs could be all the way across town. Downtown, you're going to be much more interested in layoffs that have happened 3 or 4 blocks from your restaurant, where your lunch crowd comes from. Other things like road work that diverts traffic from going by your place, a new place that has reopened, an employer changing office locations that leaves an office building near your place more vacant, etc.
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