Opinion: Boystown Economics in a Post-COVID World

The COVID-19 pandemic will be known as the biggest crash course in reality that this generation has ever seen.  Everything about our daily lives has been upended and changed for a long time to come. From a health prospective, it is the first time that young people have been scared about their health since the AIDS epidemic in the 80s and 90s.  Even in those years, life did not come to a sudden standstill.  Financially, only those over 30 years old can remember something as scary as the 2008 recession, and this will be far worse.  After all, today’s 30 year old was only 18 in 2008 and not having the newest cell phone was their top concern. 

This leads us to look at life in Boystown in 2020. The failed experiment in limited take-out restaurant/bar service in West Hollywood should be a wake-up call to those business owners and to the city itself. The lessons are obvious but not necessarily accepted by many restaurant/bar owners. Were we too reliant on transient traffic? The sugar high for out of town tourist dollars combined with businesses catering primarily to nightlife customers (the majority of which do not live in WeHo) clearly proves that when the going gets tough, the bachelorette parties get going. Relying primarily on “20 somethings” coming from five to 25 miles away or customers from the Midwest who are fascinated by “Vanderpump Rules” is not a sustainable long-term proposition. 

Restaurants and bars in West Hollywood have long since broken up with the locals in exchange for the here today, gone tomorrow, shot drinking, stripper tipping, credit card spending, screaming vomiters. It’s time to take a good look at the prospects of growing up and acting like an adult city because many of those previous customers may not be back for a while. 

The Price Rip-Off Factor

For too long, the business model of many owners and landlords has been not one of evaluating how much they need to charge for their goods or property in order to make a FAIR profit, but rather one of a “how much can we get away” with approach.  This is not as normal throughout the world as the hype businesspeople would have you believe.  Many of us are from smaller cities that have a very different mentality when it comes to business.  Customer service and price value should be a priority. Not necessarily so in West Hollywood. Owners complain that their costs are so high that they must charge silly amounts for ordinary goods.  A bottle of vodka is cheaper for a high-volume bar in West Hollywood to purchase than a small bar in Dallas, however, the same drink price can be as much as three times higher in Weho. 

Landlords’ attempts to justify the outrageous rents and lease agreement conditions is commonplace in our market. COVID has given all of us the experience of excessive grocery shopping, and by now most of us know that a chicken breast for dinner should not be $28.  My new in-home bar (where happy-hour doubles are served daily) has reminded me that a $13 well vodka is five times higher than it needs to be. Typically, true business owners find ways to survive, or at least give it a good shot.  Not so in West Hollywood. The few full-service restaurants that remained open during this time have proven to be dismal failures in ingenuity and consumer marketing.  Nearly all of them maintained their normal menu pricing and primetime drink prices.  How blind can an owner be to not see health and financial collision in progress? The choice to stay open should be motivated by a few principles, namely creating some revenue, keeping some staff employed, and maintaining customer loyalty.  Do I really need to purchase an $8 (plus tip) beer to go?  Do I need to buy a six-pack of Miller Lite for $25, when the market is 50 feet away?  The thought that anyone in West Hollywood would happily pay $35 for a pitcher of margaritas is delusional. 

As a city largely grounded in the hospitality/service industry, the employees that were largely retained by their establishments were managers (now doubling as take out clerks) and kitchen staff, and that was largely to take advantage of the Payroll Protection Program in order to get rent and utilities paid.  Waiters, bartenders, and bus staff were let go with the first COVID cough. The guilt trip of citizens supporting local businesses is a television fiction created by the folks at delivery companies like Grubhub and Postmates.  These delivery companies happily take their 25% cut while convincing the restaurant’s customers that we are all in this together.  If our retailers and restaurants were truly community-based businesses, they would have had the downtime to reach out to their community customers and thus create good will and customer loyalty. 

Commercial landlords will have to make decisions that are either long range for the overall good of the community or short term, which may prove devastating.  Will Santa Monica Boulevard begin to look like many towns did in Michigan in 2008? Or will landlords renegotiate the terms in a meaningful way so as not to just get past this problem, but rather as a reset back to the reality of where it is possible for a leasee to actually succeed? It is going to have to take an effort by all parties to leave some money on the table so that there is enough to go around in order for the entire circle of business to work correctly.  It needs to be a win-win-win-win.  Owners, landlords, the city, and most of all the customers. When this moment in history passes (and it will) we must wonder if the business owners that survive come away more in touch the entire community in which they operate. 

While old habits die hard, we can only hope that the prior business models get rewritten into something logical for the times ahead.  Those times will be rocky.  Now that the loud music has temporally stopped playing, this is moment when everyone has the time to sharpen those pencils and look carefully at what the future economic paradigm should be.  The past two months will prove to be a game of musical chairs where more than just one chair is missing when the music stops. Does any bar owner actually believe that this part of history will end in like the final flashback scene in the feature, “Longtime Companion,” when everyone is suddenly back on the beach at the Post-Mortem Bar? Yes, we are in Hollywood, but this ain’t no movie.


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hifi5000
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hifi5000

This writer is correct to say West Hollywood needs to diversify its economy.Depending on tourism and the latest “it” thing is not sustainable.The city is a fun place at night,but the time has come to expand its vision and go for something more permanent and that can withstand crisis like the one at present.

Vigilant
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Vigilant

Whoever may think we will be in a Post Covid world is missing the sensibility of what is happening and what likely will be part of our future.

Jonathan H. Dowling
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Jonathan H. Dowling

I’m hoping the “silver lining” to this COVID-19 “cloud” will be a reinvented, more resident focused West Hollywood. The demographics of WestHollywood are changing. It’s time for local government and businesses to recognize the changes and stop living in the past.

Steve Martin
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Steve Martin

Thanks for the thought provoking commentary. You are correct in your observation that greedy commercial landlords are playing a role in killing the goose that laid the golden egg. But the City has benefited from years of solid economic growth even though there have been signs in recent years that this growth was not sustainable. The City’s economic foundation must be diversified through focused changes in our land use goals; in other words, fewer hotels and more office space to provide jobs and services for our local community. Unfortunately our land use decisions are often powered by the demands of… Read more »

Greg
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Greg

I don’t own a Weho business but if your rent is $30K a month, you have to charge $13 for a drink to survive. And if the building costs $5M to buy, the landlord has to charge $30K a month in rent to cover the mortgage. It all comes down to real estate prices.

Steve Too
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Steve Too

Well written. When it comes to take out, the quality of the food is even more important. We often accept subpar food due as a result of other benefits of an establishment (the atmosphere, crowd, etc). When you’re being solely judged on food quality, some (even pricey) restaurants value goes down tremendously. Some establishments survive primarily due to being in close proximity to more popular places. If restaurant A is booked, B or C are options “because we’re here already”. Those alternatives don’t necessarily come as top of mind when ordering takeout. Finally, there’s some types of food that just… Read more »

Mike
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Mike

It doesn’t take a Wharton graduate to observe the frivolous spending West Hollywood City Council has engaged in over the last 20 years. Nor one to realize the over-dependence on bars and resturants. Commercial and residential landlords have run wild for thirty years. Whoever came up with that stupid waste of a rainbow sidewalk should be fired …yesterday.

Greg
Guest
Greg

Actually, right now while there’s less traffic is the perfect time to repaint the rainbow sidewalk.

Ham Shipey
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Ham Shipey

we don’t want a rainbow sidewalk. looks cheap.

Jason K.
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Jason K.

I want the rainbow sidewalks!! I don’t think they look cheap.

Mike
Guest
Mike

That is a great idea…as long as those that want it, pay for it! And it’s not taxpayer money.

Johnjx on Hancock
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Johnjx on Hancock

And the automated parking structure!

Steve
Guest
Steve

Mike – I think you might miss the point of the rainbow sidewalk. It’s a monument to the LGBTQ population and history of West Hollywood, as well as a beacon of safety and inclusion. While you may not be part of that (I have no idea), it is an essential part of this city’s history – and a very inexpensive tribute when you think about it. Perhaps looking at it through that lens will allow you to see it differently.

Ham Shipey
Guest
Ham Shipey

Then there should be sidewalk tributes to other groups as well. Either way, tax dollars should not be used.

Cool Guy 420
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Cool Guy 420

What’s needed is direct, unconditional cash payments from the federal government, to people. The federal government needs to simply assume the payrolls of all businesses. Republicans and Democrats alike oppose this on ideological grounds. This is a dark moment

Blueeyedboy
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Blueeyedboy

Cancel all payroll taxes.
Cancel property taxes until Newsom lets us go back to work.

Mike
Guest
Mike

And cancel every single tax dollar that goes to illegal aliens…welfare, housing, medical and criminal costs. The same leadership that wasted tens of millions on stupid legal fights with the Federal Govt. over illegal immigration, followed up with $25 million of taxpayer money for their “defense”
What you will see is the massive erosion in pay for millions in California. This is what they voted for. Love that Democratic supermajority.
Look out! There are massive tax increases coming your way!!!

Ham Shipey
Guest
Ham Shipey

luckily I’m going to retire this summer……..moving to a state with low taxes and less nonsense.

Eric Jon Schmidt
Guest

Very good. I’m glad someone finally had the courage to shine light on this issue. Perhaps as a
strategic business management consultant, people will believe you. I know I do. I believe that this crisis will bring business owners off their cloud nines and back on earth and realize they need to have fair prices for their products.

Ham Shipey
Guest
Ham Shipey

“It’s time to take a good look at the prospects of growing up and acting like an adult city because many of those previous customers may not be back for a while”. So true. I have never been to any bar or restaurant on Santa Monica…….and it’s in my own hood. These businesses are not interested in locals…….so I dine in BH and only utilize Pavilions in WH. The city (at least that part of town) seeks to attract only a certain type of customer. So if that group stops coming or slows down……it’s a slow death unless they change… Read more »

Rob A
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Rob A

I’m sorry to read that this is your opinion of West Hollywood and the bars and restaurants on Santa Monica Boulevard. To be honest, you missed out. To say that they do not care about the locals is wrong. I frequent the bars and restaurants on SMB and I can say that the majority of them care a great deal for the locals and go out of their way to create a warm and welcoming environment for their local patrons. In fact, there is an entire community of locals that would not exist if it were not for the bars… Read more »

Ham Shipey
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Ham Shipey

Sure…..some locals are the demo for the bars and restaurants on SM. But most aren’t.

Glenn
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Glenn

Thank you Rob.

Michael Grace
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Michael Grace

Unfortunately, we are stuck with a City Council where most of them have as much business experience as a 10-year-old operating a lemonade stand. When it comes to dollars in spending, the one thing that they all have in common, except for Lauren Meister, was getting pay for play money from developers who have saturated the town with commercial leasing space, overpriced condos and hundreds of hotel rooms. Since we are still under house arrest, we can see what is described in this article is a very bleak future. The development group and stakeholders will be having a major come… Read more »

Mike
Guest
Mike

Well stated!

Jonathan Simmons
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Jonathan Simmons

As now I give her the new title: SUZIE “EMERGENCY FUND” ORMAN was preaching/begging anyone who asked, to HAVE AN EMERGENCY FUND. She directs her advice mainly to average people. (I am assuming she Expects Cities … Especially like our unique UBER WEALTHY city (per capital for the hundreds of Millions our bas,, restaurants, HOTELS, Tourist economy WOULD BE MANAGED BY PROFESSIONALS WHO KNOW A CITY CRISIS FUND HAS TO BE PART OF LOCAL GOVERNANCE). I recall seeing somewhere the city is IN CRISIS needing ANOTHER hundred million dollars for the next phase (I’ve lost count how many phases a… Read more »