Businesses slammed by fire now in recovery mode

WAYNE HEILMAN Updated: November 9, 2012 at 12:00 am • Published: November 9, 2012

The losses suffered during the Waldo Canyon fire by homeowners are familiar numbers: Nearly 350 homes destroyed in the Mountain Shadows neighborhood of Colorado Springs and dozens of others heavily damaged, with insurance claims totaling more than $350 million, making it the state’s most destructive wildfire.

Losses suffered by businesses have been more difficult to quantify, with hundreds affected initially by evacuations that forced retailers, restaurants and other companies to shut down for more than a week and hundreds more losing bookings in the weeks after the 18,000-acre blaze. Lodging and tourism appear to have felt the brunt of the economic impact, with the occupancy rate in local hotels falling in July from the year before by the largest percentage in more than a decade.

Volunteers from the Colorado Springs Small Business Development Center, Service Corps of Retired Executives (SCORE) and the Colorado Springs Community Alliance contacted or were contacted by more than 1,500 businesses since June 29 in areas that were either evacuated or put on notice of potential evacuation. Based on those calls, the center estimates those businesses lost $7.1 million in sales as a result of the fire, but that estimate could increase as businesses close out their books for the year. More than 30 local businesses sought special loans through the U.S. Small Business Administration available to businesses hurt by the fire.

Here are the stories of five businesses who sought help from the Small Business Development Center and got assistance with marketing, legal issues, business and flood insurance, seeking new loans or restructuring existing loans. In the wake of the fire, each suffered sales losses totaling thousands of dollars that forced owners to cut back on hiring workers, delay paying some bills and cut back on new inventory purchases. All report that sales have come back in recent weeks, but each is still recovering from the financial losses they suffered as a result of the fire.
 
Mavi Turkish Arts

Faruk Sahin opened Mavi Turkish Arts at 724 Manitou Ave. in Manitou Springs just in time for the summer tourism season. But his timing turned out to be unfortunate as the opening came just weeks before the Waldo Canyon fire triggered a one-day evacuation of the entire town and a prolonged closure of nearby U.S. Highway 24.

Sahin took out a loan to buy inventory for his import boutique in anticipation of a strong summer tourism season and had to dig into his savings to make the payments when customer traffic dropped sharply in the weeks after the fire. He had opened the shop to support he and his wife after exiting the Army, where he spent 10 years in the military’s World-Class Athlete program as a member of the U.S. Olympic wrestling team.

“I started seeing all of this smoke and I was thinking that I had just opened my store. What was I going to do?” Sahin said. “We had all of this inventory ready for the tourism season, then the fire happened. Everything collapsed because of the fire. Things didn’t go how I expected, so I hope to catch up during the rest of the holiday season. Traffic has been getting better in recent weeks, but people are coming in to eat and go. They don’t shop that much.”

The shop carries an unusual combination of blankets and other textiles, trays and other home décor items, paintings, sculpture and other artwork.

Spice of Life

The Spice of Life  coffee shop, delicatessen and restaurant at 727 Manitou Ave. in Manitou Springs felt most of the impact from the fire after the July 4 holiday, when the flames were beginning to die down and the blaze was nearly under control, co-owner Douglas Lewis said.

The shop lost $10,000 during the first week of the fire and another $7,000 or so in the next three weeks, forcing Lewis and his partner to delay paying some bills and reducing the income they earned from business, he said. Lewis and his partner had expected a big summer tourism season and expanded their inventory as a result, but sales didn’t start recovering until August and September.

“The signs on Interstate 25 were saying that Highway 24 was closed long after it reopened, so the fire did affect us for weeks afterwards. People normally come to Manitou if they have guests visiting, and they didn’t after the fire,” Lewis said. “Locals kept the business going and we didn’t have to lay off anyone. It has been harder to build up the business from guests because of all the media reports on the fire.”

Mild weather in August and September extended the tourism season and helped Spice of Life rebuild some of the revenue it lost immediately after the fire, and the 20-year-old shop expanded with a liquor license at the end of August that also boosted sales, Lewis said. He and his partner decided against getting a SBA loan to help the business catch up with creditors because they didn’t want to add a loan payment to the monthly expenses of the business, he said.

Safron of Manitou

A record hot summer and the fire combined to reduce sales at Safron of Manitou by about two thirds from May through September, compared with a year earlier, leaving owner Safron Neusaenger with no way to pay for the large inventory she had ordered early this year after record sales last year.

The shop at 720 Manitou Ave. in Manitou Springs, which sells handmade clothing and accessories made by artists, was shut down for five days by evacuations and the closure of U.S. 24. The resulting sales slump lasted into fall as upscale tourists that make up most of the store’s customers canceled their visits to Manitou Springs this summer as a result of the fire or the heat. Many visitors come to Manitou during the summer months to escape the heat, prompting them to vacation in cooler areas, Neusaenger said.

“I had my best year ever between October 2010 and October 2011, so when I ordered merchandise in February I thought we would be super fat by fall with a strong summer,” Neusaenger said. “By the time the merchandise arrived, I had nothing to pay for it because everything was falling down around me. I was in a disaster situation, making one third of what we should. I had real issues and went to the Small Business Development Center for help. They gave me all the options, but I didn’t know what to do until I got a call from Ent.”

Neusaenger had met an Ent Federal Credit Union executive at a business gathering and later received a call from a loan officer who offered her a $20,000 line of credit to help the business pay for its inventory and weather the summer sales decline. Sales have since picked up, so Neusaenger believes she won’t have much trouble repaying the first loan her business has ever received. That’s despite what she called “the worst year, the worst month and the worst week of my life.”

Blue Sage Catering

Bookings were strong for Blue Sage Catering in June until the fire and evacuations kept the business, 5152 Centennial Blvd., located across Centennial  from the Mountain Shadows neighborhood and only a mile or so from the burn zone, closed for 11 days and cost the business many of those events and left it unable to book future business.

“We are busiest in June, July, August, November and December, but we lost a number of events during our strongest time of the year, including a big one at the Air Force Academy. We also lost a lot of business for our cafe when we were evacuated and we couldn’t schedule future business because we didn’t know when we could be open,” said Blue Sage Owner Greg Soukup. “We had our slowest month ever in July.”

Soukup estimated the business lost $25,000 in revenue as a result of the evacuation and the slowdown in bookings that followed in July, while employees lost 11 days of wages and tips. About $1,000 in food had to thrown out after the evacuation order for the area ended.

Blue Sage was able to survive after receiving a $2,000 grant from the Pikes Peak Area Rotary Endowment in October, food donations and other help from the nonprofit local food bank Care & Share and sales to loyal customers from nearby neighborhoods, including some who lost their homes in the fire, Soukup said. Blue Sage also was able to get more time to pay its real estate tax and utility bills, he said.

Sales have recovered for Blue Sage, though revenue for the year remains down between 5 percent and 10 percent for the year, Soukup said.

High Country Restaurant Holdings

The third quarter typically generates the best sales of the year for Denny’s franchisee High Country Restaurant Holdings, but that didn’t happen this year — and neither did the seasonal hiring that the chain of seven eateries usually does to handle the increased customer traffic.

High Country Co-owner Pete LaBaree estimates that because of the fire, the company’s five restaurants in the Colorado Springs area lost about 20 percent of sales he had forecast they would generate during the quarter. While the company didn’t lay off any of the 150 employees of the five restaurants, LaBaree was forced to cut work hours for many employees and he didn’t hire the 10 or so additional employees the company typically does during the busy summer months.

“We cut hours back, probably four or five hours a week per person. And since most of our servers work about 30 hours a week, that is a significant reduction in their income,” LaBaree said. “I talked to the SBA about a disaster loan, but we already have a SBA loan that tied up all of our personal equity and another loan would have tied up the equity even further. We also have a lot of capital invested in a new (restaurant) we are building in Fountain, which is our third new location in 18 months. If we had any more stores planned, we would have been in a cash-flow problem.”

Sales are now “nearly back to normal” for High Country as the company has capitalized on the well-known Denny’s brand to keep loyal local customers coming back regularly, LaBaree said.

Contact Wayne Heilman: 636-0234 Twitter @wayneheilman
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