Staying afloat in a stormy economy: Local businesses steer a new course
Oil downturn, exchange rate pose challenges
The downturn in the oil industry and a declining dollar have created challenges for local businesses, but two St. John's restaurants and a city gift shop have found ways to stay afloat in a tight economy.
"There's been a little bit of an economic turndown, but we're lucky enough to have a big customer base, this being our 15th year in operation," said Grant Fowler, general manager at The Gypsy Tea Room.
"We're in a lot of people's comfort range, and people know they can come here for a good time," said Fowler Wednesday as the restaurant prepared for New Year's Eve celebrations.
"We have a lot of loyal patrons who keep coming back, and this Christmas season we were full every Thursday, Friday, and Saturday since the end of November."
Fowler said having a good management team and keeping an eagle eye on costs are crucial in the restaurant business, where profit margins are razor thin.
"We have about 120 employees in here, so it does take a team effort to make sure we keep the monster under control."
But Fowler has seen the impact of oil industry layoffs.
The Gypsy Tea Room has a 40-person conference centre to handle large groups, and until about three years ago Fowler says it was blocked. Now, he has to more aggressively market the service.
His customers are also telling him their own stories.
"There's people now, like big oil company executives that have actually … you see them out for dinner and they say goodbye, because they're packing up and they're leaving and they're moving on to the next project because things are turning down here."
Keeping menu affordable
In a tight economy, people watch their dollars.
Fowler's newest project, Evoo in the Courtyard, opened two months ago in a space formerly occupied by a higher-end restaurant that didn't survive.
I think that people are more optimistic than what the news is saying.- Patsy Power
He said 111 Chop House "did everything right," but with an average dinner bill of $120 per customer, it didn't last.
"It was really built for some of the more affluent people around the city, perhaps with a mind towards the oil business and when that took a turn, so did the business here."
The owner implemented what Fowler called "Plan B" and turned the space into a Mediterranean-themed restaurant.
The most expensive entree on the menu is $24, much cheaper than the Kobe and Wagyu beef of its predecessor.
"Now we're into pizzas, so flour and tomatoes and fresh vegetables," said Fowler. "Our food costs here is much lower than what it was before."
Looking for local
Keeping costs down is important for another business, on the other end of Water Street.
Patsy Power owns a gift shop — Rock, Paper, Flowers — that's now in its second year.
Power said her customers are looking for "something different," and business has picked up since her store opened in August 2014.
"A lot of people are trying to shop local, and not go to the malls as much."
She's had to make some changes, however, because of the undervalued loonie.
"I have to say that I buy mainly from Canadian distributors now," she said.
"I did initially buy some American company products, and I found that it was way too expensive with the dollar declining so fast, and you can't afford to keep up with the duty, the exchange rate. Shipping costs are major."
Her plan for the year ahead is to stay the course.
"Offer really neat products and really good customer service," she said.
Making connections with customers and keeping prices down are also important.
"I think that people are more optimistic than what the news is saying," said Power.
With files from Kenny Sharpe