Opinion: Boystown Economics in a Post-COVID World

The COVID-19 pandemic will be known as the biggest crash course in reality that this generation has ever seen.  Everything about our daily lives has been upended and changed for a long time to come. From a health prospective, it is the first time that young people have been scared about their health since the AIDS epidemic in the 80s and 90s.  Even in those years, life did not come to a sudden standstill.  Financially, only those over 30 years old can remember something as scary as the 2008 recession, and this will be far worse.  After all, today’s 30 year old was only 18 in 2008 and not having the newest cell phone was their top concern. 

This leads us to look at life in Boystown in 2020. The failed experiment in limited take-out restaurant/bar service in West Hollywood should be a wake-up call to those business owners and to the city itself. The lessons are obvious but not necessarily accepted by many restaurant/bar owners. Were we too reliant on transient traffic? The sugar high for out of town tourist dollars combined with businesses catering primarily to nightlife customers (the majority of which do not live in WeHo) clearly proves that when the going gets tough, the bachelorette parties get going. Relying primarily on “20 somethings” coming from five to 25 miles away or customers from the Midwest who are fascinated by “Vanderpump Rules” is not a sustainable long-term proposition. 

Restaurants and bars in West Hollywood have long since broken up with the locals in exchange for the here today, gone tomorrow, shot drinking, stripper tipping, credit card spending, screaming vomiters. It’s time to take a good look at the prospects of growing up and acting like an adult city because many of those previous customers may not be back for a while. 

The Price Rip-Off Factor

For too long, the business model of many owners and landlords has been not one of evaluating how much they need to charge for their goods or property in order to make a FAIR profit, but rather one of a “how much can we get away” with approach.  This is not as normal throughout the world as the hype businesspeople would have you believe.  Many of us are from smaller cities that have a very different mentality when it comes to business.  Customer service and price value should be a priority. Not necessarily so in West Hollywood. Owners complain that their costs are so high that they must charge silly amounts for ordinary goods.  A bottle of vodka is cheaper for a high-volume bar in West Hollywood to purchase than a small bar in Dallas, however, the same drink price can be as much as three times higher in Weho. 

Landlords’ attempts to justify the outrageous rents and lease agreement conditions is commonplace in our market. COVID has given all of us the experience of excessive grocery shopping, and by now most of us know that a chicken breast for dinner should not be $28.  My new in-home bar (where happy-hour doubles are served daily) has reminded me that a $13 well vodka is five times higher than it needs to be. Typically, true business owners find ways to survive, or at least give it a good shot.  Not so in West Hollywood. The few full-service restaurants that remained open during this time have proven to be dismal failures in ingenuity and consumer marketing.  Nearly all of them maintained their normal menu pricing and primetime drink prices.  How blind can an owner be to not see health and financial collision in progress? The choice to stay open should be motivated by a few principles, namely creating some revenue, keeping some staff employed, and maintaining customer loyalty.  Do I really need to purchase an $8 (plus tip) beer to go?  Do I need to buy a six-pack of Miller Lite for $25, when the market is 50 feet away?  The thought that anyone in West Hollywood would happily pay $35 for a pitcher of margaritas is delusional. 

As a city largely grounded in the hospitality/service industry, the employees that were largely retained by their establishments were managers (now doubling as take out clerks) and kitchen staff, and that was largely to take advantage of the Payroll Protection Program in order to get rent and utilities paid.  Waiters, bartenders, and bus staff were let go with the first COVID cough. The guilt trip of citizens supporting local businesses is a television fiction created by the folks at delivery companies like Grubhub and Postmates.  These delivery companies happily take their 25% cut while convincing the restaurant’s customers that we are all in this together.  If our retailers and restaurants were truly community-based businesses, they would have had the downtime to reach out to their community customers and thus create good will and customer loyalty. 

Commercial landlords will have to make decisions that are either long range for the overall good of the community or short term, which may prove devastating.  Will Santa Monica Boulevard begin to look like many towns did in Michigan in 2008? Or will landlords renegotiate the terms in a meaningful way so as not to just get past this problem, but rather as a reset back to the reality of where it is possible for a leasee to actually succeed? It is going to have to take an effort by all parties to leave some money on the table so that there is enough to go around in order for the entire circle of business to work correctly.  It needs to be a win-win-win-win.  Owners, landlords, the city, and most of all the customers. When this moment in history passes (and it will) we must wonder if the business owners that survive come away more in touch the entire community in which they operate. 

While old habits die hard, we can only hope that the prior business models get rewritten into something logical for the times ahead.  Those times will be rocky.  Now that the loud music has temporally stopped playing, this is moment when everyone has the time to sharpen those pencils and look carefully at what the future economic paradigm should be.  The past two months will prove to be a game of musical chairs where more than just one chair is missing when the music stops. Does any bar owner actually believe that this part of history will end in like the final flashback scene in the feature, “Longtime Companion,” when everyone is suddenly back on the beach at the Post-Mortem Bar? Yes, we are in Hollywood, but this ain’t no movie.