Immigrant Businesses Try to Beat Recession Blues

New America Media, News Report, Elena Shore, Vivian Po, Ngoc Nguyen, Posted: Sep 25, 2009

Traducción al español

Editor’s Note: Small businesses are the backbone of immigrant communities and of local economies, so it’s no wonder that they are feeling the effects of the nation’s economic downturn. As customers feel the pinch in their incomes, businesses see the effects in their spending habits. Inventive and resilient, small businesses also adapt to the changing climate in order to survive.

NAM surveyed Latino, Chinese and Vietnamese business owners in San Francisco and Oakland to see how they are faring in the recession. NAM staffers Elena Shore, Vivian Po and Ngoc Nguyen report .

Money for Rent, Not Paletas

Recession or not, Mexican businesses that serve up traditional foods like conches, paletas, tacos and sopes to locals in San Francisco’s Mission District remain popular social gathering places in the neighborhood.

But sales are another story.

“There used to be lines of people out the door. It’s not like it was,” said Estela Valle, 56, describing the drop in customers at her panadería, La Mexicana Bakery, on 24th Street. The neighborhood bakery has sold fresh baked conches and other Mexican pastries since 1972. Since the economy collapsed, Valle says she has seen a 40 percent drop in business.

But the bakery, which is open from 4:30 a.m. to 8:00 p.m., continues to be popular among the usual crowd of housewives and construction workers, says Valle; they are just buying less.

On one recent morning, several local women arrived and chatted with Valle about their families while a Spanish-language radio talk show blasted in the background.

“People have always liked this bakery,” she says. “It’s a necessity, not a luxury.”

Carlos, 33, who sells paletas, the Mexican frozen fruit bars, in flavors like lemon, tamarind and coconut, from his cart on Mission Street, says these may not be seen as a necessity. “Most people are saving their money for rent and food,” said Carlos, who asked that his last name not be used.

“About three or four times a day,” he said, “I see a kid asking for an ice cream and the mom tells him, ‘No, I don’t have money with me, stop bothering me.’” Before the economic downturn, he said this would only happen once or twice a day.

Carlos, who came to the country four years ago from Puebla, Mexico, said the economic downturn took him by surprise. “I never imagined there would be a decline in the economy,” he said. “I came here to work.”

He sells about $50 worth of paletas each day from his street corner, where he works from 9:00 a.m. to 7:00 p.m., seven days a week. Half of this goes to his employer, which operates ice cream carts in the area. The other half is barely enough to make a living.

But he still manages to send money to his family back home. Four years ago, he sent them $600 a month. Now, he says, he sends them $300.

“Life is hard,” he said. “But if you’re strong, you can get through it.”

Back on 24th Street, a steady stream of locals line up for tacos at Taquería Vallarta, which has served up a full menu of breakfast, lunch and dinner under the same owner for 10 years.

“Business has gone down, but there aren’t less customers. We might even have more customers. The difference is they are eating less,” said cashier Alisa Berea.

Customers who used to buy full dinner plates of steak or shrimp with rice and beans are now buying tacos for $1.50 each. Others, she said, are ordering off the menu -- a plate of rice and beans for $2.50 for, or tortilla chips with beans on top for $1.50.

Some taquerías, Berea said, have lowered the prices of burritos to attract more customers. But, she says, the effect is purely psychological -- they have also raised the prices of other items, like sodas, to make up the difference.

“I think people figure it out,” she said.

One of the busiest establishments on 24th Street is La Palma Mexicatessan, which was crowded throughout the day on a recent Wednesday. Founded in 1953, La Palma is known for its tortillas, sopes and huaraches, which it sells by the pound to restaurants and walk-in customers. It also sells Mexican grocery items and prepared foods like chicharrones, tacos and burritos with handmade tortillas.

Mario Castaño, 18, whose father co-owns the store, said customers are buying a little less prepared food these days, and more separate ingredients that they can cook at home. But Castaño said people keep coming back for the tortillas.

“When I’m in Sacramento, I meet people who know our tortillas,” said Castaño. “There’s no other place that does it, and it’s good.” 


No Jobs? Forget Dry Cleaning

Dry cleaning businesses in San Francisco, most of them owned by Chinese Americans, have seen their profits sag along with the drooping economy.

“My business dropped 40 percent,” said Betty Chan, who has owned Rainbow Laundry, a laundry and dry cleaning store near the border of Chinatown and the Financial District, for more than 30 years.

Chan is not the only one.

“Many of my weekly customers were laid off. They no longer need to have their suits cleaned and ironed,” said Michelle Zhu, who has had a 30 percent drop in her business, J & M Dry Cleaners and Laundry, since last year. “Instead, they [customers] only come before going to job interviews,” she said.

Zhu said business has never been this bad in the 12 years she has owned the shop. The lower Nob Hill neighborhood, where her business is located, is populated with single and well-educated young people, who will migrate where job opportunities lead, she said. If they find jobs elsewhere, they move away.

“I no longer see some of my former customers,” said Zhu.

Location is indeed a big factor determining how seriously a cleaner is impacted.

Chan believes her business is hurt worse because her shop is near the Financial District. White-collar workers could easily drop off their clothes in the morning and pick them up after work.

While Chan was talking, two men wearing suits and ties came by and dropped off two bags of shirts. But Chan whispered that they come less frequently than before.

Jack’s Dry Cleaning in the Richmond District has experienced a 10 percent drop in business. The western part of San Francisco has more middle class families.

However, Lee, owner of Jack’s Dry Cleaning, said the change is significant, and he is willing to work longer hours to meet customers’ needs to avoid further business losses. Lee already works an 11-hour day.

Apart from regular dry cleaning and ironing, cleaners said they get fewer requests for wash-and-fold service, for which customers pay by the pound.

“When the economy was good, they were busy earning money. They did not bother to spend time washing clothes, ” said Zhu. She noticed some of her customers began to do their own laundry after their work hours were cut.

Customers are also asking for discounts more often, so Zhu started to give regular customers a 5 to 10 percent discount. But Lee believes offering discounts will not help to retain or improve business. He said customers were not interested in comparing prices. They simply cut back on overall spending on cleaning and laundry services.

Chan said she hasn’t raised prices for a long time, despite the continued rise in her costs over the last few years, so cutting prices now would be a hardship. She still has to cover rent, insurance and other expenses.

Although business is down, Chan finds herself working harder.

“Shirts are dirtier. I can tell from the darkened collars that people are wearing their shirts for more than one day,” said Chan. She now spends more time, detergent and water on cleaning clothes, and that adds on to her already tight budget.

Despite trying her best, Chan receives complaints from customers from time to time about their shirts not being fully cleaned. Chan will offer a second wash because she cannot afford to lose any more of her customers.

Zhu and her family stopped dining out and she has trimmed spending on unnecessary items.

“I am basically a volunteer now,” she said only half-joking, “working long hours and earning nothing.”

Manicures Now a Luxury

Nail salon owners, many of them Vietnamese immigrant women, say their businesses are slumping along with the economy.


Susan (Xuan) Le, owner of Susan’s Nail and Spa in Oakland, has been a manicurist for 20 years, and she says this is the hardest time.


“Before, it was very good. Now it’s very, very tough. It’s harder to pay expenses,” she said. “Today, I’ve had only two people. I’m telling you it’s very tough. I used to make $200-$300 a day, now it’s more like $10-$30 a day. One day, I only made $6 for repairing two nails.”

Le charges $28 for a manicure and pedicure, and despite dropping her price to $25, business is still slow. 
 


“People can’t afford it. They can’t afford to pay rent and eat, how can they have money to pay for manicures and pedicures?” she said.


“They are coming back, but it’s taking longer than before. If they used to come every two weeks, now they’re coming in once a month. My income is cut in half.”

Le employs one fulltime manicurist and rents out several manicure stations, but she says it’s getting harder to attract workers.

“Nobody wants to rent. They can’t make enough money renting stations,” Le said. At the height of her business and the heyday of the nail industry she employed six workers.

Kim Pham, owner of Nova Nail Spa in San Francisco, said the bad economy has stunted the growth of her family’s business. She and her husband used to own two nail salons, including one they marketed as a “green” nail salon, where non-toxic products are used.

Pham sold the non-green nail shop, which she says had seen a 35 percent drop in income. “We have young children and need to spend more time caring for them,” Pham said. “We figured that if the economy continues to go down, we need to focus our energy, and with two shops, that’s harder to do.” 


Her green nail salon is taking a hit, too – with a 15 percent revenue decline. But Pham says the shop is buoyed by pricier services.

“What helps in our case is that our prices are higher,” she said. “We offer good quality services, so we charge more, so our income is okay.”

While Pham cuts back, Quyen Ton is venturing out on her own. After 14 years as a manicurist in other peoples’ shops, she decided to start her own business: White Daisy Nail Spa in San Francisco.

“I have the skills and am good with customers. I had the ability and confidence to run my own business. I wanted to see if I could make a go of it, and make a better living,” Ton said.

Ton said a bad economy didn’t deter her. Instead it gave her an opportunity. “The good thing is that it’s easy to get a lease, they don’t require a lot, and it’s easier to negotiate a lower rent,” said Ton.

Still, she says, it’s hard to grow her business now. Despite the Grand Opening banner outside the shop offering a 20 percent discount, business has been slow. And she faces competition from two other newly opened nail salons on the block. 


Ton said she’s operating at a loss now, and is only surviving because of her husband’s job. She hopes business will pick up by Christmas or she may have to sell her shop.

“If we can survive and make it through the bad times, when the economy goes up again, we’ll be better off.”


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