While the stock market has yo-yoed since the end of May 2015, reaching nearly its all-time high before dropping almost 9 percent in three months – all things considered, the economy is doing pretty well. The latest Store Front Business Index™ reveals that the businesses that form the backbone of the American economy – like your local laundromat, pharmacy and even your favorite take-out spot, are growing faster than the GDP. The Index takes a closer look at the health of the (typically small) businesses that populate Main Street USA.
Sixteen years ago, Heather and Michael Barnes traveled 1,250 miles south from their home in Ocean City, Maryland, loaded up with entrepreneurial spirit, to pursue the good life in Key West, Florida.
In 2004, after first running a Dairy Queen store, the Barneses invested in a pasta café called Mangia Mangia in the heart of Key West. The couple eventually bought the 27-year-old business located on the first floor of a Caribbean-style, white and pastel green building for $3 million, backed by a private investment from the restaurant’s founders.
Over the years, the 78-seat restaurant ingrained itself in the tightly knit community within the small Florida island. Of the business’s 19 full and part-time employees, many have worked there for over 25 years. Many people, beyond the Barneses, are dependent upon the restaurant’s livelihood.
Two years ago, the business, which was seemingly doing well and earned its place on the list of must-visit restaurants in Key West, experienced a slump as the city began rebuilding its North Roosevelt Boulevard — the pathway connecting the island to the rest of Florida Keys. To make matters worse in the short term, four of the hotels on the island located at the “unofficial entrance to Key West” were bought by an out-of-town company that razed them in 2013, only to rebuild them again.
“We didn’t know that was going to happen – kind of like the hurricanes,” Mrs. Barnes said. The tourists staying at the hotels made up a large portion of the restaurant’s patrons, she added.
The two-year hotel rebuilding project took out almost 500 rooms from the four-by-two-mile-wide island, which meant that many tourists couldn’t stay in Key West during that time.
“For a restaurant that opened for dinner at 5:30 in the evening in a tourist destination, the lack of hotel guests meant fewer people eating at the restaurant,” Mr. Barnes said.
It was during that time that the couple decided to shop for loans to help them offset the lost income and stay afloat. After months of shopping, the couple decided on a $20,000 loan from CAN Capital, which they said helped the restaurant through the tough times and ultimately enabled them to expand.
With the hotels now back on the boulevard, business is bustling again.
“We have had one of the best seasons since we’ve been here for the last 10 years and it’s really been awesome,” Mrs. Barnes said. “Now I feel secure in moving forward and expanding our business to serve lunch and breakfast, and opening the wood fire oven.”
With the offseason upon them again, the couple says it’s the ideal time to experiment with changes to their business. After some thorough searching, the Barneses went back to CAN Capital to seek another loan, this time for $71,000, in order to extend their hours of operation and buy the oven.
The 25,000 full-time residents comprising the island community are their foundational customers, Mr. Barnes said. “Key West is a small town. In short-season, it triples in size, but in off seasons, it’s a lot smaller,” he said. “You see those people all the time.” To succeed, they need to cater to both regulars and visitors alike, he said.
He cited several restaurants that have closed after being bought by out-of-towners. “We have seen it many times. People with lots of money come here thinking they could make it and they don’t,” he said.
The Barneses have found, they said, that wholesale changes are generally not embraced when tinkering with an established business in Key West. “If it isn’t broken, don’t change it,” Ms. Barnes said.
The changes the Barneses are making now come after being in Key West for more than a decade. They are calculated changes that they feel confident in implementing.
For the Barneses, the dream is alive in the Florida Keys – and the couple is confident that they are prepared to weather future storms and other unexpected happenstances along the road.
To download the 2016 Q2 PYMNTS.com Store Front Index™, powered by CAN Capital, click the button below.
About the Index
Store Front businesses are the heartbeat of the local economy – the shops that line the main streets and side streets of the local community. It’s the convenience store, dry cleaner, fitness center, hardware store, home remodeler, coffee shop, local restaurant and watering hole, the hair salon. The PYMNTS Store Front Business IndexTM has assembled data on each and every one of these businesses across the U.S. and measures their vitality every single quarter. Think of it as your window into the health of this vital sector every 90 days.
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