What Big Cities Lose When They Lose Their Small Businesses
A few weeks ago Jeremiah Clancy announced the sudden closing of Mama's Food Shop, a quaint spot in New York's East Village that had been serving comfort food to the neighborhood for about 15 years. Before shutting down, Clancy posted a thoughtful note on Mama's website about the increasing hardships of owning a small business in a big city. The farewell gesture caught the attention of New York magazine, Felix Salmon of Reuters, and others.
"I owed it to my patrons and I owed it to the neighborhood," says Clancy of his decision to write the note. "I would have never shut the doors and just disappeared. I find that more odd than taking the time to write something."
Clancy ran Mama's Bar before he and his brother took over the food shop from the original "Mama" back in 2006. Mama's weathered the worst of the recession ("I still think we're feeling the effects," says Clancy), but rising costs since then have prevented it from getting back in the black. The 37-year-old Clancy says he will be doing one final Mama's catering gig this weekend and will then enter the job market "like everyone else." We wish him luck.
Atlantic Cities caught up with Clancy to talk a bit more about why it's so tough for Mom and Pops to survive in a major city — and why it's so important they do.
After the recession, what was the hardest part of running the shop?
One, the neighborhood started changing. Where it used to be a very vibrant neighborhood with a mix of cultures as well as different socioeconomic backgrounds, it started becoming very homogenous. Anyone who could still afford the East Village after the recession hit had a corporate job or a very steady job. So it lost a little of its character.
Two, once the recession hit, and from the conversations I've had with other small business owners, all the landlords started to panic. It was a really bad culmination of our economy collapsing and New York City still wanting a tremendous amount of property taxes from the landlords. I think there used to be a gentlemen's agreement with most businesses in the East Village where the burden of the property taxes was on the landlord. But then everything got passed down to the small business. I saw this all along Avenue B, Avenue A.
You told The Local that your property taxes went up a ridiculous 380 percent.
When I took over the lease they were around $300 to $500 a year. Then it went to be in the tens of thousands. It went so far up that even at that point I should have known it was unsustainable — but I was a young man running a business for the first time. I tried to fight the good fight. They did go up something ridiculous. Hundreds of percents.
When did you suspect that Mama's might not make it?
When I sat down with my accountant a couple months ago, the biggest problem I was having, not only paying the rent and the property taxes, the building is so old I was investing a tremendous amount of money in order to just keep it Health Department-ready. He's the one who's like, "I don't know why you're doing this, because not only is it a tremendous amount of money, but it's your salary. You're putting all this money back into the space that isn't ever going to be yours." That's what really pushed it over the edge for me.
You wrote in your farewell note that the Health Department has too much power. What did you mean by that exactly?
I'm not a conspiracy theorist at all. After 2007 the city was broke and had to create ways to make revenue. The Health Department is a really good thing and its purpose is to protect everybody. But something happened in the past couple years where I think they've gone … toward nitpicky inspections that have less to do with food protection and more to do with fines and what they can find wrong with your space.
Christine Quinn, she's starting to move everything in the right direction, getting the Health Department to reduce fines when they're not about food or public safety. That should have happened years ago. Every time they walked through my door I would spend, on average, $3,000. That's either paying the fines or fighting the fines.
The cherry on the sundae was, they came in, and a certificate of qualification had expired. I'd been going in and calling and trying to figure out why we didn't get this in the mail. They finally sent someone and they fined me $1,000. Even though it's like, hey I've been in your office every day, it doesn't matter.
What could the city do to help small businesses compete without costing itself too much in revenue?
I think with the Health Department there should be two different violations. Some are critical and some are just, you have to fix that. As far as the permits, those are reasonable, but if they streamlined everything — which is a dream — that would make things easier on people.
I guess I don't have a great answer for that question. I wish the city would fight a little more to keep the real essence of these neighborhoods, which are the small businesses. But I don't know how they would do that. I'm all for change, but I wish there would have been someone helping the small businesses with loans.
We've heard a lot from federal lawmakers about helping small businesses recently.
From my own experience, when my brother and I were running the business, we really looked into all those small business loans that were supposed to be available, that were supposed to jumpstart the economy, and we could not find them. I ultimately went to Citi Bank and got a loan. What I learned is, basically the banks were given a directive by the government to loan money. It's not like I got some fantastic interest rate or anything like that. I went to Citi Bank and they said, we've been told to start lending money again, and that's how we're going to help jumpstart this economy.
What does the city lose when it make things too hard for a small business to compete?
I think the thing that makes this city unique is it does have different neighborhoods that are specific and unique unto themselves. They have their own personality. What has happened — and I don’t want to blame the mayor, because it's the evolution of the city — but things have become so expensive here, not only rents but operating costs, that the only way businesses can survive in these neighborhoods is if they're banks or corporate chains. These neighborhoods are being whittled down into carbon copies of each other.
This interview has been edited for clarity and length.