Plagued Retail: My View from the Trenches

We’ve lost half-dozen retailers — restaurants, clothing, massage… Tenants who in effect said, sue me, I’m taking a hike. And replacement shop tenants are just behind spotted owls on the endangered species list.

By John E. McNellis, Principal at McNellis Partners, for WOLF STREET:

“I have 2 options that are non-negotiable. I’m going bankrupt (chapter 7). Covid happened and I cannot survive. I’d rather not go through bankruptcy because it ruins my credit, but if I have no choice, I won’t think twice. The second option is to let you keep my deposit, and take what I have in the bank which is around 10k. Again this is non-negotiable. That is all I freakin have.”

This tenant’s sad bankruptcy threat sets the table for examining our retail—supermarket-anchored neighborhood shopping centers—in the Covid-19 era. Embellishing only slightly, we have two kinds of tenants: those that can’t pay and those that don’t wish to.

In short, bricks and mortar retail has been caught in a pincer movement, flanked on one side by Covid-19 itself, and on the other by its cure. You know this already: The virus separated us, the cure institutionalized that separation, forcing a societal shutdown that has driven us into our deepest recession in perhaps living memory, a recession that seems certain to run several years. The coronavirus means we will remain wary of one another until there’s a vaccine, perhaps longer; the cure means the majority of Americans will have little to spend.

What does this portend for our retailers? Putting aside kids swarming the beach towns, few of us wish to take more risks than necessary. Driving on a freeway entails an infinitesimal risk, but we do it to get somewhere; going shopping now involves a minute risk, but we accept it if the shopping is essential. (As an aside, we had no idea we were in the essential retail business until this year.)

Our essential retailers—supermarkets, drug stores, banks, convenience stores and gas stations—are doing fine; in fact, groceries and gas are killing it. Someone’s idea of essential, liquor stores and cigarette shops, are not complaining either.

As evidenced by the poor fellow who wrote the impassioned plea above, our problem is with the small shop tenants in our centers. Using a broad brush, you can divide small tenants into three principal categories: personal services, food, and the sellers of stuff (whether hard goods like cellphones or soft like clothing).

The winners among these categories are those that can address our fears (distancing) and our pocketbooks (cheap). Using these two fixed points, navigating retail is fairly straightforward.

Personal services—beauty shops, nail salons, drycleaners, massage parlors, yoga studios and gyms, etc.—win on cheap, but lose on distancing. Fortunately for some—notably, hair and nails—essential trumps distancing; these shops will come back swiftly. Others, like dry-cleaning and massage, are less essential and will take time to regain their pre-Covid levels.

Finally, there’s the sweat subcategory: small gyms, bike spinning parlors, yoga studios, etc. Absent an amazing vaccine, these tenants may be in serious trouble. You can’t make money at 50 percent maximum capacity and you’ll never convince some meaningful percentage of your customers that they’ll be safe dodging sweat in a tightly packed room.

Following the distancing/cheap lodestone, food shapes up like this: drive-throughs are golden, traditional take-out (e.g. pizza) is rocking, and those restaurants that can successfully ramp up their take-out should be fine.

You may have noticed that some ethnic foods—like Asian and Indian—hold up well on home delivery; others, particularly those with complicated menus, do not. The hardest hit in this category will be higher-priced small restaurants, the charming little shoulder-to-shoulder bistros with candlelit decor. Simply put, they cannot afford to run at 50 or 75 percent maximum capacity; they lose on both distancing and cheap.

By the way, the coronavirus didn’t create retail’s larger problem—excess capacity—it merely pulled its curtains back. According to Forbes, we have roughly 50 square feet of retail space per capita in the USA while Europe has just 2.5 square feet. Washington DC has a restaurant for every 103 residents, while San Francisco has one for every 201 residents. That’s a lot of competition.

Because of this, we anticipate losing a number of our restaurants and restructuring rent for others. But that goes just so far. The catch is that a successful restaurant only pays its landlord somewhere between 5 and 15 percent of its sales in rent. This means that even if we were to give our space to a restauranteur, she still couldn’t make it if her sales don’t approach their pre-Covid levels.

On to stuff. The sellers of essential stuff like eyeglasses, laptops and cell phones will be fine; it would take the Ebola virus itself to keep people away from Apple. But, let’s face it, few things are truly essential.

And stuff is where distancing and cheap diverge.

Price hardly matters if the stuff helps you bear distancing, especially if it lets you do something fun inside or, even better, outside. Best Buy’s stock is up 59 percent from its crisis depth; people are buying electronics to make home confinement tolerable. And bicycles and camping gear are flying off the shelves.

Back to cheap. Not that it ever went away—the “dollar” stores have been thriving for years—but the selling cheap-stuff-cheap phenomenon will only grow more universal thanks to our surging unemployment levels.

Bringing this home: To date, we’ve permanently lost half-dozen retailers, from restaurants to clothing to massage. Tenants who in effect said, sue me, I’m taking a hike. To compound this unpleasantness, it would be fair to say that replacement shop tenants are just behind spotted owls on the endangered species list. But if there is a safe harbor in retail, it’s a supermarket center in a good residential neighborhood. Without plan or compass, we happened to bob into that harbor years ago. By John E. McNellis, Principal at McNellis Partners, for WOLF STREET

I asked top executives from three tech companies—with a hundred employees, with a thousand, and with many thousands—where they would put their next offices. Read… The “Post-Plague” Office: There Could be Quite a Run on the Suburbs

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  115 comments for “Plagued Retail: My View from the Trenches

  1. MonkeyBusiness says:

    I have around a thousand dollars worth of credit with one of the boutique gyms: Barry’s Bootcamp. They are intending to reopen with a reduced capacity, but having read so many articles about Covid 19, I am now convinced that doing a streneous exercise in a closed room even with 1/3 occupancy will be risky for people like me.

    And these fancy gyms are often located in city centers. With workers not returning any time soon, their possibility of going bust has to be quite high.

    I tried getting them to refund my money, but so far they are only willing to extend the expiry date of my credits to “years” in the future if necessary. I think my money is lost :(

    • 2banana says:

      You could try to sell on Ebay for a significant discount.

      A very illiquid asset.

    • Wisdom Seeker says:

      @Monkey – will they let you transfer your credit and/or membership? If they go out of business, you probably lose your credit.

      • MonkeyBusiness says:

        I have no one to transfer it to. And the gym’s not willing to play the role of matchmaker.

        Yeah, my money’s probably lost. It is what it is.

        • JV says:

          MB: my small gym in morgan hill let me pay cash for another full year membership knowing it was going out of business. I’d been a member there for years. LET THE BUYER BEWARE!

        • Thomas Roberts says:


          The potential health risks of getting out of shape, have to be taken in consideration. Not sure what your age is. But, alot of people are going to come out after CCP-19 is over in bad health, because, they hid inside the whole time. Many will never recover. Many people might hide inside, get sick next year (before CCP-19 is over) and have a worse health outcome as a result.

        • MonkeyBusiness says:

          I walk 2 miles a day. Not enough, but it’s still some exercise. Also, there’s many ways to exercise. I can jog outside. I definitely do not need to jog inside a crowded room, which is part of going to these fancy gyms. And just to be clear, jogging is just one part of the exercise program at Barry’s Bootcamp.

        • Sit23 says:

          During lockdown, 78% of gym club members didn’t even know that the gym was shut!

    • Fat Chewer. says:

      Hopium springs eternal. Jerome will be buying that mushy gym credit asset some time soon.

    • Hobart Chic says:

      Try harder. Squeaky wheel. You want a refund as you are not obliged to pay for “services not rendered”.

    • john bartholomew mosbrook says:

      True fitness warriors saw long ago fancy gyms were a waste of time and money. For a relatively small investment one can assemble a few pieces of equipment (pull-up bar, exercise ball, medicine ball, etc.) purchased thru Amazon to create a home gym. Gym members I’ve seen are still fat and out of shape after years of workouts. It’s the commute to to the gym that decreases their visits. Gym machines isolate muscles while home fitness devotees are developing whole groups of muscles in a single bodyweight exercise.

    • Lisa_Hooker says:

      Get a writ. Take one of the treadmills for your $1000. Use your home shower and towels.

  2. 2banana says:

    Traveling the world in both rich and poor countries.

    People will pay to look better.

    People will pay to eat out.

    People will pay to have fun.

    Better known as the 2banana hormones make folks spend the big bucks theory.

    Those type of stores will bounce back quickly, even if under new management.

    The rest of retail…it is going to be a struggle for many.

  3. Cas127 says:

    One irony…I’ve often found small and medium sized gyms to be the fallback tenants for strip malls that couldn’t find anybody else to fill vacant space.

    Now, even those marginal tenants are off the table.

    I still wonder why food markets of varying sizes can’t take up the slack…rock solid aggregate demand and among the most insulated from Amazon (what pct are really buying fresh/frozen/food period from the big A…).

    Food margins can be slim and there are economies of scale (thus, *super* markets) but at the end of the day a marginal tenant beats no tenant…and each small give up by a landlord means a lot to a low margin food mkt.

    I would be interested in hearing from landlords why there aren’t many more food markets in this age of unoccupied space.

    • Javert Chip says:

      My 2 cents on this concept:

      If you’re shopping for real food (not just soft-drinks, beer, chips & candy…), who the hell wants to shop in a small-ish store with highly limited selection, problematic availability and past-their-prime produce? That’s what 7-Eleven and gas stations are for…and they’re pretty much everywhere.

      • 2banana says:

        Fyi. The average size of a Trader Joe’s store is around 15,000 sq ft, roughly a third of the size of your typical grocery store.

        I am lucky enough to have a great local meat butcher store near me. Small store but the quality of his products is head and shoulders above the big box supermarkets.

        I would love to have a small craftman bakery close by….but no luck.

        • Apple says:

          Aldi ( owned by the same company ) also competes very successfully in this space. Limited selection and deep discounts.

        • STEPHEN says:


          On the other end of the size scale, Costco has a very similar product strategy. Extremely limited selection within a given category (eg only 2 options for olive oil) but high quality and good value.

      • Cas127 says:


        711 has a laughably limited food selection (80% of which is junk food) priced at 200% to 300% of Walmart.

        My guess is that there is a market space between Walmart and 711, especially if landlords are flexible on lease terms/rents.

        Aldi has been held up as an example and it is a pretty good one (although its expansion has slowed down) but even there, there seems to be more of a “our own pad” bias that limits expansion (in other words, Aldi and others seem to prefer new build, stand alone pads for their mkts, rather than existing inline space…despite the huge surplus/theoretically lower prices of the latter.).

        Perhaps the “pad” bias is a function of long-term real estate appreciation plays (Aldi, etc. Presumably own the pads, whereas inline stores are only leased).

        If so, this “land appreciation” mindset may be another structural impediment to the re use of surplus commercial real estate.

    • Bricks n mortar says:

      Cas – landlords don’t create the business, just the space. There is plenty of space and landlords would invest their capital along with a good food market if the business is profitable. Food/grocery markets are either low margin businesses that require big volumes or high margin high price stores. The high margin model is very limited opportunity – (High end demos) the low margin model is saturated in most markets – one of the few grocer models that is expanding is Aldi – an interesting mix of high volume per square foot with good margins due to the proprietary brand model on many of the their products. The other grocery model that is seeing steady growth is ethnic, both Hispanic and Asian. These are very limited opportunities relative to the overall market.

      • QQQBall says:

        Yeah, but ethnic grocery store are like indoor malls. They can kill the inline shops. Asian markets? You can get seafood, grocery items, takeout restaurant or small food court and buy a gold chain. Even the small local hispanic tiendas have indoor restaurants and one is also a tortillaria.

      • Petunia says:

        Because of the plandemic closing my local Chinese take out restaurant, I now know how to make my own Chinese fried rice. Getting all the ingredients wasn’t as easy as I thought it would be.

        I already had problems getting other ethnic foods, like Italian or Latino items. In the south they call spaghetti sauce, red gravy (insert eye roll here).

        • Clete says:

          Not just the south, Petunia. In Florida every retired northeastern cop/fireman/wannabe velour-sweats-wearing mook calls it that too, and most of them open a red-sauce joint with “the only authentic gravy recipe.”

        • Pavel says:

          This is a great point, Petunia. Of course there are high-end and specialist menus that are difficult to do at home. But much of the ethnic food we enjoy is after all from poor countries using local ingredients and spices (Thai, Indian, Chinese, Mexican etc).

          During lockdown I made some delicious Thai curries (easy with the ingredients; though I didn’t go so far as to make my own curry paste) and chilis (even easier). With some excellent organic corn tortillas and high-grade beef I made tacos better than anything I’ve had in a restaurant.

          I asked my 90 y.o. mother who grew up in a well-to-do family how often they went out to dine — perhaps once or twice a month! Perhaps we are returning to that kind of dining culture.

          I recall dining out very frequently, living in NY and London and Paris. In the latter especially one could eat out very reasonably (20 or 30 euros). (The wine especially was reasonable :)

          A friend and I celebrated the gradual reopening of NYC this week by going out 3 nights to places with outside tables: Italian, Mexican, and Italian again. Each night it was $150 for 2. Insanity! [Of course the celebratory cocktails were a large part of the bill :)]

          (Apologies Wolf for the rambling :)

        • Gandalf says:

          A few keys to fried rice – dunno if you were aware:

          1. Fried rice in restaurants is generally made from the previous day’s cooked white rice. Not so much from thriftiness, but the extra day of storage lets the rice dry out at the surface and incorporate the water deeper in the grain, so it doesn’t come out as soggy as if you fried fresh cooked rice.

          2. Green onions and soy sauce are the main flavor ingredients. Fry the rice with them mixed in. Everything else is optional. Garlic and ginger help if you like those flavors. Or curry spices to make it more Indo-Pak style. Any kind of protein, including soy/wheat protein substitutes, eggs, etc. Lots of veggies work, especially peas, carrots, and celery (have to be finally chopped), bean sprouts if you can find them. If the veggies are fresh and wet or frozen, best to fry them separately to dry them out to not make the rice soggy.

          3. The higher the frying temperature, the crisper and less soggy the results. The better restaurants generally have high BTU jet burners that can far outdo any stove you have at home – you can tell which ones use them because of that crisp texture and slight hint of smokiness in the fried rice.

        • char says:


          A problem with cheap restaurant food is that the batch size to make it cheap are to big to consume as a household

        • One thing I learned is to not scramble things into wet egg. Probably obvious, but it’s a nice touch.

          So we’re good on fried rice. Now we need to figure out how to do a good self-massage.

      • Pasha says:

        HMart, Assi Plaza, and Fiesta Mart are doing a very good job in the ethnic grocery catagories.

    • Kurtismayfield says:

      The square footage us too expensive, and the owner of the property will not budget on price (because that will have a negative effect on the valuation).

      They will kill themselves before they budge enough.

      • Cas127 says:

        If I am understanding you correctly, you are saying that,

        1) Commercial landlords really won’t give much (or at all) on PSF lease prices because it hurts their DCF valuation (sorta get it…but anything is better than zero actuals unless those zeroes can be made to disappear somehow)

        2) Those LLs rather go BK than adapt prices downward. Again, sorta get it but…argument kinda assumes no personal liability on loans and that BK’d property isn’t collateral on some other LL loan (pyramiding leverage is not unheard of in real estate…).

        All in all depressing, because bad incumbent structures/practices/attitudes are leading to a huge loss in flexibility…suggesting that many LLs rather rot than adapt.

        I don’t know if that is true, but RE purposing does seem very, very slow to adapt.

        I’m sure zoning and other local laws/shakedowns also play a part.

        • Kurtismayfield says:

          You are much better at wording my point, thank you so much!

          Remember after the last crash most of the foreclosures went to private equity or remained on bank balance sheets because the financial institutions were very resistant to lowering valuations. The same is probably going to play out here.

        • Sit23 says:

          The traditional solution is to keep the rent high for valuation, and on a separate contract give you a rent holiday every second month. Simple and true.

      • Stuart says:

        Let them. Not one word about the plight of the super exploited workers in retail. Now long term unemployment and a pandemic ! The parasites ( Capitalists ) did this to us, now let’s do it to them.

        • Happy1 says:

          Not sure how capitalism did this, perhaps Venezuela would be more your style?

        • Mira says:

          Is this all about sacking everyone .. restructuring to a lower cost labour market .. so as to compete with China, India, Mexico ??
          After all they are the ideal venue to derive profit.
          Quantas Australia is letting go of 6.000 staff .. leaving travellers with no choice but to grow wings .. strap themselves to the outside of the planes & wow !!
          I am looking to purchase a unit .. downsizing.
          They are over priced by $50.000 – $150.000.
          A few sold .. some purchased buy sister companies of the vendor most likely .. to maintain the property portfolio & incurring more debt .. not a good idea at this point in time.
          In Australia it is the top of the market .. every day there are more & more units .. a glut of apartments & town house for sale .. all over priced .. are the owners afraid that soon the market will drop & their investment will fall below their substantial debts ??
          My dilemma .. should I buy now or wait till rock bottom ??

    • char says:

      I’m used to the highly regulated Dutch market in which all consumer goods sellers except those that sell big things like cars & furniture are forced into shopping centers (think supermarkets) or city centers (mall stores). A new neighborhood, of which there are many because the number of homes tripled since the ’50’s, had as its center a shopping center with its (general two) supermarkets. Those shopping centers are also experiencing empty space which are often filled with what you suggest as solution. A green grocer plus or in Dutch Turkse supermarkt. Problem outside the fact that they compete with the supermarkets who are the big rent payers is that food attracts animals and that they are often such marginal businesses that they seem to me like obvious candidates for money laundering

  4. Wisoot says:

    Humanity’s purpose is not to consume but act as a processor of food in and fertiliser out. Consumerism destroys habitat that produces a fruitful fertile landscape required by healthy humans. Sustainable circular resource use mandates a change irrespective of virus. After things settle and reality arrives home from being out to lunch reason reminds us life with bacteria and virus will not end human population on the planet but is just part of the living experience of a human body. Those who adhere to insanity will suffer. Human nervous systems have enjoyed massage for millenenia. Listen to your inner light and your own nervous system instead of being a sheeple. True entrepreneurs adapt innovate morph into better. Offer smaller units to individuals on a cash in hand weekly rent basis. Create al fresco market stalls. Walking night markets is a cultural thing to socially hang out in the East. Tell regulation and rule books to get stuffed.

  5. Wisdom Seeker says:

    John does a good job summarizing his negotiations with his debtors (tenants), but what about negotiating some relief with his creditors (lenders) as well?

    Being able to pass on some rent relief to the tenants could go a long way to reviving occupancy and preventing the doom-loop of blighted storefronts that can imperil a neighborhood mall.

    I caught that restaurants’ rent is (to a landlord) only 5-15% of gross, but in a recession profit margins will be even thinner. Other costs could go down in a recession too. Workforce and food-supply costs do scale a bit with demand. If restaurants won’t work at half capacity, could storefronts be merged to create larger restaurant spaces to support more customers? With a rent discount to keep rent at 5-15% of gross?

    Any rent being better than none, and a healthy lively mall being better all over…

    • 2banana says:

      There will be no breaks for property taxes.

      The Goodfellows scene comes to mind.

      • Wisoot says:

        Sure about that? With police force abolished will NATO forces be shipped in to enforce tax paying? Are the jails big enough?

      • Shiloh1 says:

        Unfortunately speaking still from the Chicago area, but just outside of Crook County, I agree with @2banana, there will be absolutely no property tax relief. Nobody in local gov or schools had missed a paycheck nor an hour of “work”. All kinds of useless activities going on, including a street sweeper in the empty train commuter parking lots going back and forth on the clean pavement every day like the Zamboni at a hockey game. Public works trucks hanging out in alleys. Cops hiding in non-speed trap surveillance areas is also a clue.

        Now if people just don’t pay, that’s different. Second half of typical county tax installment is Sept / October around here. Boiled frog / frying pan theory works well in Illinois however.

        • candyman says:

          Ditto for Boston. I inquired about real estate tax deferrals or abatement due to Covid with my landlord. (The real estate taxes are rolled into my rent invoice) The City of Boston gave a 30 day delay in paying…May1st to June 1st. Plus, we have not had a return of employees in the office towers, which are my customer base. This is crazy. It is not sustainable.

          Also, the Mayor does not feel the need to offer any change, as commercial renters for the most part are not residents of Boston, therefore don’t vote in the mayoral election.

          The Mayor may be surprised this time around, as businesses begin to make announcements of shuttering permanently.

        • Happy1 says:

          There are state and local government layoffs where I live

        • taxpayer says:

          Cook County taxpayers went on strike in 1931. One source ( says their court appeal failed and they caved. Another source ( says that a year’s taxes were postponed, which is why in 2020 we’ll pay 2019 taxes.

    • Wolf Richter says:

      Wisdom Seeker,

      John is way ahead. He announced on March 19 his “Marshall Plan” for his tenants. Obviously, this was three months ago, and now things have gone to heck a lot more than anticipated. The below is from him, published on WOLF STREET.

      Our Retail Marshall Plan:

      We are forgiving all rent and other charges (so-called NNN expenses) for the month of April for our mom & pop tenants that have been forced to close, regardless of their business type or when they may reopen. That is to say, even if a tenant reopened on April 3rd, rent for the month would still be forgiven.

      We will treat tenants that are mom & pop franchisees of national companies (e.g. Subway) slightly differently. Because our financial resources are a light-year from infinite, we will need the big guys to help us help their franchisees. Thus, we will forgive our franchisee-tenants’ rents up to that same one-month, but only on a dollar-for-dollar basis with credits granted to them by their parent company; i.e. if Subway gives our tenant a $2,000 franchise fee credit, we will give it a $2,000 rent credit.

      We will give the same one-month credit to our mom & pop restaurant tenants outside the Bay Area even if they never shut down. But, as to our other small business uses that remain open, we will consider a rent credit on a case-by-case basis. Some tenants are suffering terribly, while others (e.g. cigarettes and alcohol) appear to be thriving.

      If a given tenant needs more than one month’s help, we will consider that on an individual basis, likely tying any additional help with a concession from the tenant (e.g. exercising an option, extending the lease term, or perhaps a downstream rent increase).

      Many of our national credit tenants are also suffering in this plague year, and we completely sympathize with their plight. They, however, will weather the storm. Also, they are highly sophisticated and understand that our lenders will not be forgiving any of our interest payments and that we are simply unable to offer rent breaks to credit tenants.

      We trust and hope that our world will have substantially returned to normalcy by May 1st, even if it takes months to fully recover.

      • Wisdom Seeker says:

        Thanks Wolf, I remembered that one and was glad for it. But I’m assuming John’s flexibility to aid his tenants (and keep up his own property values) is limited by his own mandatory payments. The investors on the far side ought to give him some wiggle room too, because socially distanced retail & service needs big, cheap indoor spaces (for at least a couple years it seems). And rent does matter.

        Given low enough rents, in a couple more months the survivors will be able to spread out into all the abandoned department stores and other spaces. And with a glut of space rents will have to come down anyway. Might as well get ahead of the curve and capture the remaining retail business from those who can’t afford to accept lower short-term income.

        • Tony22 says:

          Not mentioned, is he charging corporate tenants, like banks, retail and national brands, full freight, with no discounts?
          He should.

          I vow to spend what little I will need to buy in Mom&Pop establishments and I will pay cash to give them 100% of their sales, instead of the discounted rate that credit card companies pay them for merchandise purchased with their debt cards.

        • Wolf Richter says:

          Wisdom Seeker,

          From what John has told me, since he has been doing this for a long time, he (his firm) has very little debt. While he can therefore ride out the crisis without problems, he cannot rake the banks over the coals either.

        • BuySome says:

          Supermarket Centers as harbors? I was thinking more like the main castle of a well-decker, and the seas are lapping in these days. Empty storefronts could be open cargo holds gradually filling with an ocean of debt. As for coals, I behold shoals and it may be the keel that has been raking. Bankers lend money for fuel, but do not volunteer to do any hand pumping.

    • Bricks n mortar says:

      The commercial banks And insurance companies are generally accruing or deferring interest for landlords for this initial period of shock. Cmbs servicers are not. Retail Landlords generally have been providing forbearance and abatement for small shops and those most impacted. We generally provided 3 months abatement to small shops and dine in restaurant tenants . The problem is that sales levels after “reopening” are still so poor that the tenants can’t survive with Zero rent. I have tenants that have been in business for twenty years that are looking at failure before the end of the year. This isn’t the exception it is many many small businesses.

      The banks and their regulators aren’t going to defer and/or accrue indefinitely and the credit crisis for the landlords is coming, my guess is the end of the year .

      Hey we bought some of our centers from banks last crisis, I am not crying. Most landlords are leveraged and won’t have a lot of flexibility to navigate through a couple of years of this, so expect a lot of distressed sales. I do empathize with many of our tenants that have worked hard and taken risks to have it come apart for reasons not of their own making.
      Interesting times.

  6. JK says:

    How the heck you going to have money if you eat out all the time? lol. A restaurant for every 100-200 people? Wow. Glad I know how to cook. I understand it’s nice to eat out and treat yourself, but ALL THE TIME??? C’mon man-learn to cook and pack your lunch. No wonder people are broke. I’m not perfect, but even I know eating out will set you back mega bucks along with Starbucks every day. Regarding going out, I have no fear. I work in medical besides doing my own property management (my five tenants paid their rent-hallalulah!) and I was out and about all the time especially Home Depot and Lowe’s. What you guys freaking about? Just wear a mask and wash your hands. A colleague and I are pretty sure we had Covid in February. We’re alive. I just don’t see why all this craziness. Wear the mask, wash hands, good cough ettiquet, distance, air out your house and keep distance of children and elders if that’s an issue. GL.

    • Wolf Richter says:

      A lot of the restaurants in NYC and SF are frequented by out-of-towners, many of them tourists from far away… these two cities are tourist hot spots, and eating out is part of what tourists do.

      • Cas127 says:


        True…but nationally and in aggregate, I’m fairly sure that I’ve seen stats showing that out-of-home food spending reached parity with grocery spending not that long ago.

        There is something to be said for saving food prep time, but parity is kinda nuts (and explains why restaurant shutdowns have helped put 30 million out of work…).

    • hidflect says:

      I’ve heard some apartments don’t even have a kitchen.

      • 2banana says:

        Just a random tidbit.

        Ancient roman apartments, that kind most of the common romans lived in, had no kitchens either.

      • No Expert says:

        Wow had to google that one and apparently “in New York, living without a kitchen is by no means rare or peculiar”
        Link has some interesting history and photos

      • Michael Fiorillo says:

        It’s not uncommon to find “luxury” apartments with a four (or even two!) burner stove, microwave, no oven. These are (were?) place for twenty-somethings to cycle through every few years, people who don’t make their own coffee, let alone cook.

        Not a very appealing prospect in Covid Times.

    • Thomas Roberts says:


      It varies greatly by restaurant, but, buying lunch (especially, if they have a lunch special and if it’s your biggest meal of the day) at many restaurants can be cheaper than buying meals that you just have to throw into the oven or microwave. Microwave dinners and the like have suffered greatly from inflation and shrinkflation. It might also be healthier in many cases. If it is more expensive, it might be close like $5. It might also be close for many other food items. Eating out a lot at cheaper restaurants can sometimes be healthier (if you pick food carefully) and not necessarily add up as much as you think. This doesn’t necessarily, count eating out on vacation or with friends.

      Cooking from scratch is obviously the best and cheapest way, but, if you are single it’s a lot of extra work for 1 person.

      I cook simple things myself. But I would rather pay an extra $4 to get something like kung pao chicken with steamed rice and an eggroll made for me than spend an hour making it myself; Or eating it for 4 days straight. There is also alot of food items at nearby restaurants, that I couldn’t make myself, because, of the ingredients they have; Or the prohibitively long time it would take to make alot of the stuff from scratch.

      In my average Midwest city and nearby cities, I am amazed at how many restaurants and stores there seem to be, that have very few people in them at any given time, that are still in business (I’m talking pre-CCP-19).

      • JC says:

        “Or eating it for 4 days straight” ever hear of a freezer?

        • Thomas Roberts says:

          “A freezer” you say? I don’t got one of those. I got one those cold boxes that plugs into the wall. There is one part that’s cold and another part that’s extra cold.

          Freezing most things after it has been cooked, makes it lose too much taste to me. If you are single, there are a lot of things not really worth making yourself; if somewhere nearby makes it cheap enough.

          A lot of things you would have to make from scratch in order to beat some restaurants on price. And not everything lasts long in the freezer. Some things have to be reheated carefully and separately, and just wouldn’t be worth it.

          The big problem is that alot foods from the grocery store that are ready to heat up or that require little preparation keep shooting up in price. It would probably be shocking to many if they realized just how much food prices have gone up over 20 years or even 10. It’s gone up a lot faster than wages or whatever the claimed inflation rate is.

          There are also some things that cannot be frozen like cooked rice or anything with rice (it can result in food poisoning).

        • Lisa_Hooker says:

          Sure, and have some liquid N available for flash freezing so as to not turn your food into mush.

      • john bartholomew mosbrook says:

        Since the COVID-19 I haven’t been to the supermarket. I order wild salmon from Alaska; brown rice and black beans thru Amazon. Haven’t been to a mall in 16 years. Clothes, shoes and other stuff are purchased online. I buy winter stuff from Russian outfitters and sweaters from England. Malls don’t have the stuff I want and malls are creepy places anyway.

    • Petunia says:

      All the years I lived on my own in Manhattan(NYC), I ate out everyday every meal. My kitchen was the size of a very small walk in closet, two people would fit in it like sardines. Because of the large number of restaurants, the competition made it cheaper than cooking.

      Diner food in NYC is among the greatest and most affordable in the world. I learned to love international dishes by eating the daily specials.

  7. MiTurn says:

    Not just brick-and-mortar that are hurting, but also publishing companies. I write freelance, nothing big, and the two last articles I’ve sold to two different magazines have already been published, but I still haven’t been paid for either one. They say they are behind in payments because advertising is down.

    • Wolf Richter says:

      Sorry to hear you’re not getting paid. That really sucks.

      The big publishing industry is getting killed. Advertising has dropped, and the big and small middlemen, such as Google, are robbing publishers blind to keep their own earnings up. Google needs to be broken up.

      • Thomas Roberts says:

        Google definitely needs to be broken up.

        I hate how AdWords works, older businesses and bigger business have access to the older, more advanced AdWords site. And newer smaller businesses have to use AdWords express a dumbed down, more restrictive version that gives you less control over your ads. I am convinced the entirety of Google ads are designed to make big business pay alot for near exclusive advertising on Google, but make it seem fair to the smaller businesses.

        • Thomas Roberts says:

          And Google’s immense censorship (mainly on YouTube). And potential rigging of future search results (they keep talking about doing this). Spying and much more.

        • Timothy Senters says:

          Better watch out, Google may close the comments section if talk like this continues. Sarc..

        • Wolf Richter says:

          No Sarc… Google has been hounding me over the comment section. I’m in battle with their bot right now over some comments.

        • Ensign_Nemo says:


          “Immense censorship” is actually an understatement. YouTube used audio scanning software to automatically demonetize any video that included the word “coronavirus” during January, February, and the first part of March.

          Stop and think about that.

          During the crucial ten weeks or so when the virus was first spreading, you could not mention the correct scientific *name* for a deadly and pandemic virus without losing all revenue for the entire video.

          Nobody could discuss this topic without either losing money or resorting to codewords – some computer hardware channels called the virus “human malware”, for example, to evade the auto-demonetizer.

          This almost certainly limited the spread of information about the virus and cost an unknown number of lives.

          Censorship killed people, in this case. It may have been “soft” censorship, as only money was lost rather than banning the video completely, but it was still censorship. The end result was that the virus spread faster than the information on how to counteract the virus, and people died.

      • Taps Coogan says:

        “Google needs to be broken up”

        How that has not already happened is a genuine mystery to me. 90% of online advertising outside of walled gardens….

        • Cas127 says:


          I think a fair argument can be made that a *lot* of Google’s power rests on nothing more than users’ laziness.

          1) There are alternatives (Bing, DuckDuckGo, etc) and the underlying tech is not so utterly incomprehensible that new competitors could not arise,

          2) There still are non-search ad networks/email ads/etc…Google, FBook, and the Big A get 70% of internet ad dollars…but that still leaves 30% and the tech is already in place if advertisers want to redirect spend

          3) All sorts of ad tech can theoretically compete with Google…it is mainly the fact that user inertia is still greater than perceived Google oppressiveness that keeps Google huge (which relatively speaking, is something that has only occurred incrementally over the last 10 years).

          If people truly hate Google (and I’m not a fan of some of its practices) there are ways around them (admittedly easier for users than site publishers)…it just takes a modicum of effort.

        • Taps Coogan says:


          I agree with you. As a consumer I make an effort to avoid it.

          To me, the monopoly argument is all about ads. Other ad services just don’t hold a candle. To say nothing of the money, smaller outfits can’t provide the compliance with increasingly complex privacy regulations that google can (though theirs isn’t that great either). There is endless irony to the fact that privacy regulations like the EU’s GDPR are going to end up leading to more google not less of it.

          When one company runs 90% of a market and the publishers are going under, and don’t have viable alternatives, and the monopoly is taking ~40% of ad revenues just for matching advertising and publishers, something is deeply wrong, IMO.

        • Thomas Roberts says:


          I do use alternatives to Google, but, because of lack of competition and lax laws the alternatives might end up just as bad in the end.

          Even if you don’t use them, Google and Facebook track people across the internet. Android phones ridiculously allow apps alot more control over your phone than you realize. It’s very easy to imagine apps can not only be spying on you, but, also anyone near you in public.

          All the big tech companies are censoring now, the only way to stop them is in congress, which is a very uphill battle.

        • Gandalf says:


          Problem solved

        • Thomas Roberts says:


          Problem not solved.

          Even if you have never used Facebook or been to Facebook ever. Facebook has a profile of you that they can sell to advertisers. Any site that has any sort of Facebook symbol on it, so you can post to Facebook or anything like that; that symbol loads from Facebook’s server and they know exactly what website you are on. Same goes for Twitter and others. Other sites like Google track you in their own ways.

          In general it’s called cross site tracking. Some web browsers like Firefox and safari are starting to try to block this now.

    • roddy6667 says:

      Articles that are distributed on dead trees do not have a bright future. They will join stone tablets and hieroglyphics soon.

      • MiTurn says:

        Both of the magazines noted are combined printed and e-versions. Subscribers can have either version. The format is not the problem.

    • sharonsj says:

      Took me five months to get paid for a short story sold to a national magazine….

  8. Paulo says:

    Excellent article and very informative.

    re: But, let’s face it, few things are truly essential.

    That’s the problem. Robots doing all the manufacturing work so folks think fringe service options might be a good idea to get started in business. Wedding stores? Nail salons? Dining out all the time?

    Party shops?

    Well, I’ve got my playoff beard on the grow and won’t get a haircut until after vaccine. We now have one Covid case on Vancouver Island after several months with none. Stage three announced yesterday so next week wife and I will hitch up the Westie and head to the north west coast of the Island where there will be no tourists. I plan to catch a spring salmon off the beach on light spinning tackle. Total cost? Maybe 50 bucks in fuel. Steaks around the fire and a glass of Crown Royal. Hard to beat that in a restaurant. Just sayin’.

    The best things in life are free. To quote Fargo:
    Marge Gunderson:
    There’s more to life than a little money, ya know. Don’tcha know that? And here ya are. And it’s a beautiful day. Well. I just don’t understand it.

    • Island teal says:

      Good comment. Ref to Fargo reminds me…where is the new season with Chris Rock?

    • MiTurn says:

      Good thoughts Paulo,

      Vaccine might not happen, but life continues. Sounds like you’ve figured that out.

      We expanded our garden (doubled it). Fun to be outside with the wife, nature never changes, increased food production — the good kind — and, oh, fishing more too. Got me one of those one-person fishing kayaks. Great for social distancing.

    • Pavel says:


      I always enjoy your comments. I’ve never been to Vancouver, alas. I read Malcolm (and Margery) Lowry’s “October Ferry to Gabriola” just after finishing uni and that part of Canada seems very charming. Though obviously changed a lot since then. You seem to have a great life and great lifestyle — kudos.

      And that is a brilliant quote from “Fargo” — one of my absolute faves. And how true.

  9. Petunia says:

    One of my favorite shops is a place in New Orleans that operates as a coop for artisans selling artsy items and jewelry. The artisans share the rent and everybody has a showcase or space in the store. It’s always different every time you go. This is a unique and interesting way to lease space and attract tenants, and affordable for them as well.

    I also saw this done during the GFC in Florida with a home decoration theme. Every vendor in the store was selling a different type of home decor, closets, windows, doors, etc., and they displayed items in a shared space.

    Also encourage all your tenants to not go cashless, because personally, I will never shop anywhere like that again.

  10. WES says:

    If you have resources, life goes on as before.

    If you don’t have resources, life sucks and you are going to die a thousand times over.

    Bill Gate’s first rule is: Life is unfair. Get over it. Because he isn’t going to help you for helping make him a multi-billionare.

    • Cas127 says:

      “helping make him a multi-billionare.”

      Which you did *in exchange* for his company handing you software.

      There was/is no charity on either side…it was a trade of items of value.

      • Lisa_Hooker says:

        I’m not so sure. I “traded” MS some money, which I value, for some software, which, after the user “experience”, turned out to be of very dubious quality.

  11. Ken B says:

    Hi Wolf!

    Love your knowledge and insight! Anyway you can do “compliment sandwich” headlines from time to time? Give a prop to something positive (bread), then the tough truth (meat), then a tiny slice of hope (bread). It’s gonna be a long summer.

    Here’s my quick shot at today’s topic:

    Congratulations, no serious asteroids today! Plagued Retail: My View from the Trenches. Puppies like hugs too!

    Cheers! Ken B

  12. Steve says:

    Wolf, are you going short to make money? Or to defend civilization?

    • Wolf Richter says:

      Good question. I might end up with neither (though it looks pretty good at the moment). But I am trying to make a point by publishing the trade :-]

      • VintageVNvet says:

        VG at 1155 EDT, but waiting to see if fedbros jump in again and it goes up to close up for at least this day,,, OR, if reality is finally setting into the minds of the day trader types and it really does go to heck today…
        Lots of fun to watch, for us with ”no dog in this fight” though there is one watching me right now to see if ANYone is going to play with dogs of the canine type instead of the SM types…

  13. Just Some Random Guy says:

    Restaurants close all the time. Isn’t that the #1 business failure, or at least top 5. That industry always has churn. Corona only accelerated it for 2020. So yeah a lot of them closed. And a lot of new ones will open up to replace them either later in 2020 or in 2021.

    People aren’t going to stop going out to eat long term.

    • Jdog says:

      They do not have to stop, only go less frequently, and it has a major impact on the industry as a whole. The restaurant business works on an extremely slim profit margin….

  14. Keith says:

    I do not think waiting for a vaccine is much of an effective strategy. It will take time to develop and test, but more importantly is the acceptance rate by the public, which IMHO could take years. I do not see many people rushing out to take a vaccine that is perceived as “rushed” to market to deal with COVID. I suspect many people, myself included, would prefer to wait and see if side affects develop from any early adopters, as well as see as to whether this disease is as dangerous as the media has made it out to be. There are many unknowns on these front that need to be resolved.

    • VintageVNvet says:

      One of the really cogent folks on here, G, is an MD who has been reporting sporadically, no doubt due to his/her extra work these days. They are very clear about the dangers of this virus so far and going forward.
      IMO as one fully trained in ”hard” and then ”social” sciences 50 years ago and trying to keep up since, this virus is going to be around until it has done it’s dirty deed and either killed us older folks or disabled a lot of younger folks, possibly to the point of needing comparatively massive personal assistance for eva…
      And, even longer, we can pretty well surmise that some of the remote places that have dealt with this virus by eliminating all ”incoming” will be dealing with the threat for many years until they too achieve clearance and closure — if closure ever does become a real possibility — depending on the potential for this virus to mutate, etc., per ”flu”,,, ”cold”

    • Wolf Richter says:

      If a unicorn startup, run by a bunch of Silicon Valley cowboys and funded by Softbank, comes up with a vaccine, it’s going to be two full years after the vaccine becomes available to the public before I will even think about thinking about getting it. If it’s by a legitimate pharmaceutical company, I will still want to wait, but not as long.

      • Cas127 says:


        This is actually going to be a significant problem re C19 vaccine…US institutions have used up so much trust to so little end, that the default perspective of the public is marked wariness to any new promises.

    • Lisa_Hooker says:

      I am old enough to remember when one of the early polio vaccines killed quite a few people and gave disabling polio to quite a few more. For myself, I’ll wait.

  15. Curious says:

    No one has mentioned art galleries or museums. Thousands of art-world employees have lost their job. Small galleries in tourist meccas are being driven out of business by fewer visitors and high rents, while museums will now have even larger deficits. Where would SF, for one, be without its artists, museums and galleries?

    • sierra7 says:

      Thank you for your post!
      What will the world be without the arts????
      We focus too much on the material effects of this disaster and not enough on all the global orchestras, ballets, “gig workers”, the “painting” crowd……
      Have caught several up to date youtube presentations of classical presentations with players distancing along with audiences and some just with the players involved.
      Sad Sad Sad……

  16. Macro Investor says:

    Disappointing that he doesn’t say where these anecdotes take place. Gives us no clue to the culture, for a before/after comparison. It could be a major city center or it could be a rural village for all we know. I suppose he’s scared of exposing himself.

    Marginal businesses were always, well marginal. Nothing new here. Interesting for entertainment value but nothing learned.

    • Wolf Richter says:

      “Disappointing that he doesn’t say where these anecdotes take place.” … “I suppose he’s scared of exposing himself.”

      John’s firm is linked in the byline. Duh!!! Its website lists a whole bunch of their projects. Duh!!! So just have a look for 3 seconds instead of spewing nonsense all over yourself.

  17. M says:

    Things may not get better anytime soon. Some small business owners now must decide if they want to keep sitting on the pot indefinitely.

    Accordingly, you should keep in mind that next year, since the income of many small business owners may go below the mean income in their locality, many will qualify for Chapter 7 bankruptcy. If your income is above the mean, only certain exceptions might sometimes qualify you for a Chapter 7 bankruptcy.

    Due to dollar limits, fewer will qualify for Chapter 13 bankruptcies, because that type of bankruptcy is slowly being phased out by the inflation planned by the “Fed.” If you are a sole proprietor or even a business partner, you must take care that your debts to not grow so much that you do not qualify for Chapter 13 as a result.

    Some debt relief agencies are creditor-funded scams to get you to wait until your debt increases so much that you can no longer qualify for Chapter 13 before you file: they offer purported debt decreases, but those are often much less than what you could achieve via bankruptcy. Your credit will already have been ruined by then by defaults.

    Bankruptcy will almost always let you keep your main asset: your home. To be eligible to file for Chapter 13 bankruptcy, an individual must have no more than $394,725 in unsecured debt, such as credit card bills or personal loans. They also can have no more than $1,184,200 in secured debts, which includes mortgages and car loans. They must have income, so they can make monthly payments.

    Also, keep in mind that many states have exemptions that protect a long list of your property, home, pensions, burial plots, etc., in bankruptcy and even without a bankruptcy being filed, so for example, in California, you can often keep more than $10,000 in business property/cash. See CCP 704.220 – Deposit accounts of “…an amount equal to or less than the minimum basic standard of adequate care for a family of four…,” or $1,724 under current standards (effective September 1, 2020).
    CCP 704.225 – Deposit accounts to the extent necessary for the support of the judgment debtor, as well as the judgment debtor’s spouse and dependents (effective January 1, 2020). CCP 704.070 – 75% of wages paid within 30 days before filing bankruptcy. CCP 704.060 – Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $8,725 total, or up to $17,450 if used by both spouses in the same occupation. 703.140(b)(5) – $1,550 of any property plus any unused amount of burial or homestead exemption for use on any property of the filer’s choosing.

  18. B Wilds says:

    Retail closures come with a hidden cost to society that the average person fails to internalize. Retail closings will result in lots of other small businesses closing their doors. People often forget that the brick and mortar stores suffer several expenses not fostered upon online companies.

    Consumers might someday regret throwing their communities under the bus for the promise of free overnight shipping. The closing businesses, both large and small are often viewed as the bedrock of our communities and with the closing of each one, a little bit of us goes with them.

  19. P.Wood says:

    I live in the STL area, flyover.
    John mentions, as a business doing well, “cigarette shops”.
    What is that? I have spent time in SanDiego, Colorado, and here at home, and have never heard of such a store.
    Is he referring to the “Tinder Box” type of Pipe/Cigar/Junk stores?
    Enlighten a fella, would you?

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