While there is a semblance of normalcy on the mom-and-pop shop lined California and University avenues in Palo Alto today, many businesses are still struggling to stay open nearly four years after COVID-19 hit the Bay Area. Businesses here grapple with rising inflation and operational costs, and looking for new customers after regular patrons have all but disappeared as employees continue to work from home.
This is why the Palo Alto City Council last week identified economy recovery for small businesses among its priorities for 2024, along with climate change, housing and community health.
At ZombieRunner Coffee, a popular spot among workers around California Avenue, it has been a rollercoaster ride of sorts for owners Gillian Robinson and Don Lundell.
While business has not yet returned to pre-pandemic levels, the cafe’s sales are in good shape, Robinson told this news organization.
With many customers working remotely and some companies closing down entirely, ZombieRunner pivoted to marketing their drinks and whole bean coffee on their website to supplement the revenue loss.
“Business is starting picking up,” Robinson said.
Palo Alto Mayor Greer Stone, who recently began a one-year term last month, said helping businesses pivot was important to the city.
“We have a transitioning economy right now really across the world. We’re still trying to figure out where work from home and telecommuting is going. Is it here to stay?” Stone said in a phone interview. “A lot of our retail and our restaurants are hurting because the office workers have not returned anywhere close to where they were pre-pandemic, so that’s a transition we’re all dealing with – from brick and mortar to online.”
Making road closures permanent, which was seen as a way to allow restaurants to operate outside while indoor dining was restricted, has been a hot debate among residents and business owners for several months.
The City Council voted to make the strip where ZombieRunner is located on California Avenue permanent late last year.
While Robinson said she enjoys the pedestrian-friendly road, especially during its weekly Sunday farmers market, she understands the lack of vehicular traffic may not be helpful to all businesses.
But she hopes the city will do a better job of letting the community know local businesses are open to the public.
According to the city’s business environment analysis published last August, while sales tax revenues are “mostly back to pre-pandemic numbers” as of the end of 2022, it said, “sales tax recovery alone, however, is not an absolute reflection of recovery and profitability.”
“Many small, locally owned businesses, particularly restaurants, retailers, and personal service providers, were the hardest hit during the COVID-19 pandemic and are not back to pre-pandemic cash flow and required revenue margins,” city staff said in its report. “Inflation and the increasing costs of doing business, supply chain, and manufacturing disruptions, rising interest rates, employment, and labor shortages, the rise of online shopping, and hybrid work preferences all affect small business operations and overall recovery.”
According to the January 29 City Council agenda, economic recovery projects to be completed this year include the permanent installation of parklets, the conclusion of a study for new parking facilities on University Avenue, and road beautification projects, among other initiatives.
While some retail stores and services such as barbershops and beauty salons find that not having parking near their establishments dissuades customers from patronizing their stores, many restaurants and cafes don’t seem to mind the street closures.
“We love it,” Rick Fleming said, manager of Osteria Toscana on the corner of Ramona Street and Hamilton Avenue.
Osteria Toscana is located at the end of Ramona Street, which is still closed to vehicles, near Palo Alto City Hall.
The well-loved Italian restaurant has been around for nearly 38 years. Fleming said business has been slowly recovering post-pandemic and he is hopeful it will improve this year.
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More pedestrians on Ramona Street and food delivery apps have helped the business weather the challenges of the pandemic and its aftermath.
“It’s hard to tell what’s going to happen. But I’m hopeful we’ll be able to bounce back when the weather gets better,” Fleming said.
But it’s not only restaurants that have been on a ride following the pandemic.
Malina Lindt, a co-owner of Peninsula Optical, said that while she and her business partner Jeff San Diego were able to quickly recover in 2022, their sales took a hit with the collapse of Silicon Valley Bank last year, as cautious clients curbed discretionary spending.
“We felt something right after that,” she said. “It was disastrous.”
Even as the optical shop was not subject to as many physical restrictions as dine-in restaurants, Lindt’s experience is emblematic of broader economic challenges many businesses across the region continue to face.
While it’s been a tough journey to recovery for Lindt, like many other local business owners, with the rising costs of running a small company, she’s hopeful this year will be better, and said she would continue to operate in Palo Alto.
“I think that Palo Alto is actually one of those really dynamic cities where they kept their identity,” Lindt said. “I think once the stock market starts to bounce back, maybe we’re going to see more people feeling comfortable (spending) their money.”
