Small Business

College town businesses face uncertain months ahead as hopes hinge on school reopening plans

Key Points
  • Rites of passage synonymous with fall in college towns across the U.S. like move-in or football games are no longer certain experiences because of the coronavirus pandemic.
  • Small businesses in these towns are left wondering how deeply they'll be impacted.
  • Business owners know plans for fall can change, even with a plan released from the campuses they call neighbors.
Pedestrians walk past Leavitt & Peirce in Harvard Square in Cambridge, MA on June 30, 2020.
Lane Turner | The Boston Globe via Getty Images

The city of Clemson, South Carolina, grows nearly four times its size from 8,000 to around 40,000 when Clemson University students return every fall. On football game days, the number of people in the city can swell to more than 100,000.

Jason Beaty, owner of Clemson Variety & Frame, usually hires more workers going into fall to handle the uptick of sales at his store and typically orders $100,000 in inventory for delivery in August when students begin to trickle back from their summers away. This year, he doesn't have any orders placed.

"My strategy is lock my wallet up and week-to-week, if I need to order it, I'll order it," he said. "I'm not forecasting into anything because there's just too many variables out there to try and even come up with a number to order."

The coronavirus pandemic forced nearly every college in the U.S. to adapt to remote learning in spring. Events like graduation also went away, hurting the area businesses that expect these events to bring in higher sales than usual.

Now, rites of passage for students like move-in weekend and football games are not certain experiences in college towns like Clemson come fall. And the small business owners in these cities are left wondering how their business will fare without these events that usually drive business.

Beaty's store is known as the place to go for school spirit paraphernalia and diploma frames, and for the specialized materials needed for architecture classes. His business, as he describes it, is a stone's throw away from the Clemson campus and, for better or worse, moves in lockstep with the school. When the college's football team won the national championship, for example, his sales soared 60%. Now he's seeing the detrimental effects the relationship can have: without students on campus, sales were down 90% in April and 50% in May.

The amazing thing about college towns is the small and unique businesses that characterize those towns, but a lot of them do not have the staying power to weather a sustained economic challenge.
Michael Chasalow
Professor, University of Southern California

Clemson plans to bring students back to campus and have approximately 75% of classes with at least some in-person instruction. But the fate of fall athletics, a key component to the success of Beaty's business and others in the town, is still uncertain.

College students' presence during the school year changes the landscape of cities across the U.S. The population of Brunswick, Maine, hovers around 16,000 while approximately 1,800 students attend Bowdoin College there, school and census records show. A study from the University of Cincinnati Economics Center found that Wilmington College had a $46.5 million impact on the economy of Wilmington, Ohio through student and employee spending during the 2015-2016 school year.

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Michael Chasalow, a law professor and director of the Small Business Clinic at the University of Southern California, said businesses in college towns often rely on selling the experience in addition to the product. With sales peaks such as Mother's Day and graduation missed, the fall will be a "make or break" time for many of these businesses.

"The amazing thing about college towns is the small and unique businesses that characterize those towns, but a lot of them do not have the staying power to weather a sustained economic challenge," Chasalow said.

'Holding their breath'

Even if students return, Chasalow said he expects there will be some caution that will weigh on everyday activities. He said, a business' success in the fall will depend on many factors, including the size of the city without students, if a place can provide their product outdoors or to-go and how many students live off-campus.

One factor that has made it hard is that businesses have already been "holding their breath" with drops in sales over the last five months, said Adam DiCenso, owner of Pinocchio's Pizza in Cambridge, Massachusetts, steps from the campus of Harvard University, which announced a fall reopening plan last week that involves bringing 40% of students back to campus while teaching all courses online.

TJ Callahan, owner of the restaurant Farmhouse in Evanston, Illinois, which is home to Northwestern University, said there's a domino effect between what the university decides to do and sales that goes beyond students alone. The success of many of Evanston's business, including his own, Callahan said, is rooted in having a busy downtown.

Northwestern is planning to bring students back to campus, but that doesn't mean on-campus life or Callahan's business will be the same, he said. Callahan normally anticipates around $700,000 from catering events at the school alone, not to mention business from families staying at the hotel where is restaurant is located when touring the school or coming for parents' weekend.

"The university is the economic engine that makes Evanston go. When you see the university shut down, so much other business around Evanston shuts down, too," Callahan said. "There's a cascading effect that makes it hard for a business like mine that needs people walking around and people being in the street, and that's just not true in Evanston right now."

Rising cases, policy reversals

These business owners know plans for fall can change, even with protocols released from the campuses they call neighbors. The University of South California reversed course from its robust reopening plan on July 2 to only anticipating 10% to 20% of classes being taught in person.

The rapid increase in cases in recent weeks adds to the uncertainty. The U.S. has reported more than 65,400 new cases on average over the past seven days, up nearly 22% compared with a week ago, according to a CNBC analysis of the data from Johns Hopkins University.

School announcements do not provide much clarity when it comes to planning for the fall, Callahan said. He isn't sure how much more business Northwestern reopening will actually bring him, especially given the fact that even though campus is expected the reopen, it won't be back to normal and in-person events his business thrives off of are unlikely to happen.

The Brown Jug in Ann Arbor, MI
Photo: Dominick Sokotoff

The University of Michigan plans to bring all students back to campus for a hybrid-model semester. Knowing some students will return to campus is good, Perry Porikos, owner of four businesses in Ann Arbor, Michigan, said. But he knows he'll have to be ready to roll with the punches given the unpredictability.

Porikos owns restaurants including the Brown Jug, and the aptly titled Study Hall Lounge, near the University of Michigan campus. His businesses often make a profit by having the spaces filled to near capacity, Porikos said. Social distancing orders make that harder. Porikos said he will be focusing solely on surviving and trying to break even.

"If I know it's going to be a big storm coming in and there's going to be five feet of snow and nobody will be able to walk, guess what I'm going to do? I'm going to close my business down until the storm is gone," Porikos said. "This one is in an invisible storm because you don't know what people are going to do."

'Tread water until August'

In Clemson, Beaty thinks his business will survive, but it won't be easy on him and his employees. His business has hit bumps in the road before, like during the 2008 recession, he said. But there is no way to know what will happen in fall, if the football team will play or if the state government will put mandates in place that will impact his business.

And even during the recession in 2008, there was still football and graduation that would help buoy him up. Now, Beaty's trying to feel his way through the pandemic with the information available, and prayer.

Despite being in a college town, Beaty pays a rent comparable with Greenville, a city 30 miles away with more than 71,000 people year-round. When South Carolina began reopening, Beaty saw Greenville up and running with 24 hours. Beaty is still waiting for his city to truly restart, which he expects won't happen until August when students return.

When it comes time for fall and students begin to come back, if football does happen, Beaty hopes his customers will be understanding if some items are missing from his shelves. Placing large pre-season orders without being sure there will be a season it too much of a risk, he said. He's better off trying to place orders late or potentially lose out on some items than order on the hope of a season.

"We're currently treading water and a lot of folks are saying, 'Well, we can tread water until August, when the students come back,'" he said. "But what happens if they pull that rug out from under us, too? Now you're going to have to tread water until January, and I'm just not sure that many businesses around here can do that."

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Correction: Bowdoin College is in Brunswick, Maine.