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Can Gay Businesses Survive the Crunch?

lacage2Nearly every night for the last 24 years, Frank Marino has put on his Joan Rivers costume and stepped out onto the stage of Las Vegas’ The Riveria as host of An Evening at La Cage, Sin City’s world-famous drag revue. But on Monday, the lights went dark on the 4th longest-running show on the Strip, and they’re unlikely to come up again anytime soon. “We sincerely regret the decision to close La Cage, but fully understand the economic pressures forcing the situation,” Riviera president Robert Vannucci said in a statement. “Right now I’m in shock, I’ve never had another job in my entire life. I know nothing else”, said Marino on Tuesday.

He’s not alone. Across the country, gay business owners are closing up shop, laying off workers and devising strategies to survive the worst economic crisis in two generations.

Last week, the nation’s oldest gay and lesbian bookstore, New York’s Oscar Wilde Bookshop , announced it would close its doors in March. Manager and owner Kim Brinster stated that despite all the efforts to keep the doors open, there was simply no way Oscar Wilde could survive, saying “I’ve never been the owner, I’m the caretaker. And unfortunately there’s nothing we can do now.”

In San Francisco’s Castro, Mecca, the popular gay supper club, had spent the last few months trying to do something – anything &ndsh; to stave off the tide of red ink. First, they launched a gay club night, then brought in local drag queen Donna Sachet to host a dinner night, but in the end, there was simply not enough business to keep the restaurant afloat. The Bay Area Reporter was alerted to the news via a statement earlier this week:

“Mecca restaurant closed … as a result of the recent, very challenging business climate,” CVP Holdings Inc., Mecca ‘s owners, said in the statement released by Andrew Freeman and Co, which has briefly handled Mecca’s public relations, according to a representative at the firm. The representative, who didn’t handle the account, requested not to be identified.

Marc Sittenfield, Mecca’s general manager, didn’t respond to attempts by phone and e-mail for a comment. An Andrew Freeman account representative didn’t respond to a request for more information.”

Gay-owned businesses, many of them single-owner labors of love, are hard hit by the worsening economic crisis. Late last month, the leadership of the National Gay & Lesbian Chamber of Commerce (NGLCC) met with the White House to discuss the crisis and lend their support to the President’s economic stimulus bill, which passed in the Senate yesterday but still needs to be reconciled with the House version of the bill.

“Evidence points to gay businesses being particularly vulnerable in this harsh economic winter.”

“We let the President and his team know that he had our support in his plan to stimulate the economy and we thanked him for a plan that includes support for the small business engine that runs the American economy,” said NGLCC CEO and Co-Founder Chance Mitchell.

In particular, the NGLCC hopes that the inclusion of access to capital and tax relief for small businesses in the plan will make a difference. The package extends bonus depreciation and gives small businesses “the opportunity to write off up to $125,000 of those capital expenditures.” But will it be enough?

depressingThere are no statistics that measure the rate at which gay and lesbian businesses contract or expand, but anecdotal evidence points to gay businesses being particularly vulnerable in this harsh economic winter. Most LGBT-owned businesses are small and many depend on the disposable income of gays and lesbians, a resource that’s falling into short supply. However, there are glimmers of hope.

In Palm Springs, a gay retreat known for its small gay-owned and operated hotels, deep discounts and warm weather have kept the crowds coming. A new hotel, the Desert Eclipse Resort, opened in the fall and Dink’s, and upscale restaurant and nightclub, also opened recently. An anonymous Dink’s employee says, “We’re packed most weekends. The gays love a good time and they come to Palm Springs to relax and unwind. We’re an oasis from a lot of the bad news happening elsewhere.” A new gay bar, Studio One 11, is scheduled to open this month in nearby Cathedral City.

Adding credence to the idea that people like to drink away their sorrows, gay businesses involved in nightlife are also thriving. A Los Angeles-based promoter, willing to speak on the condition of anonymity, told Queerty, “If anything, we’re making more money now. They say nightlife is a recession-proof industry and it seems to be true. I think people are looking for a way to forget their troubles and we’ve been offering free drink specials to get people in the door… This is actually something some of my promoter friends at straight nights have seen. They’re all struggling, but you know, it seems us gays know that when the going gets rough, it’s time to start drinking.”

New York nightlife mag Next‘s editor Brian Moylan agrees:

“A bunch of us noticed the same thing when we got together on Monday. We came in, and we’re like, ‘I went to blah-blah-blah and everything was packed! And my colleague is like, ‘Oh my God! I went to so-and-so and it was packed! And we put it together. Everyone is fucking going out. It’s January—or February now! And the weather is cold. It’s not a time when clubs are full. And people are standing in lines in the cold! That’ll kill your party quicker than anything. There’s something definitely happening out there.”

If there’s a trend, it’s that businesses that were vulnerable before the economic collapse are even more so now. The evidence for this is most pronounced in the world of gay media, which has been decimated in recent months. Last month, PlanetOut laid off 33 percent of its workforce as it merged with Regent Media in a move that was less merger than it was fire sale. Regent has its own troubles; they folded their travel magazine OutTraveler and have transformed The Advocate into a monthly magazine.

“It seems us gays know that when the going gets rough, it’s time to start drinking.”

Chicago’s Windy City Times closed its newsroom, and the financial investment firm that owns The Washington Blade and other gay papers has gone into federal receivership. San Diego’s Gay and Lesbian Times reduced the size of its weekly editions, with the remaining employees taking staggered unpaid leaves. Los Angeles’s two gay magazines, Frontiers and In, have merged into a single biweekly paper. A high-placed member of the National Lesbian & Gay Journalist’s Association, speaking anonymously, said “I don’t know that the organization is going to survive, to be honest. We’re not seeing the money come in, especially from members, who are facing their own personal financial problems. It’s understandable, but very disheartening.”

At the core of the media layoffs is a loss in advertiser revenue, which makes the gay media something of a canary in the coal mine. As gay-owned and gay-supportive businesses see a loss in revenue, the first thing they do is pull back on advertising.

One thing is certain, with the economy continuing to spiral downward and economist’s fearing a deflationary spiral, the worst is yet to come. The question is, is there enough of a market for gay and lesbian focused businesses to last through the current crisis– and, are gay consumers willing to go the extra mile to spend their dollars on gay and lesbian owned businesses?

By:           Japhy Grant
On:           Feb 11, 2009
Tagged: , , , , , , ,

  • 17 Comments
    • ggreen
      ggreen

      Many Castro businesses simply don’t know how to compete in the market place. The local “business association” that many gay businesses belong to helps to keep potential competing merchants from renting or leasing space in the Castro. It also keeps current merchants from competing with each other over price or carrying the same items (the customer always gets screwed). As far as Mecca closing, hiring Donna Sachet is always the kiss of death for any enterprise.

      Feb 11, 2009 at 10:25 am · @ReplyReply to this comment ·
    • Wolf
      Wolf

      This one of the reasons that GAY Money should support GAY Businesses. Especially now.

      Feb 11, 2009 at 10:30 am · @ReplyReply to this comment ·
    • GayBobVT
      GayBobVT

      The good news in Vermont last weekend was that a gay bar, Two Friends Bistro, opened in South Burlington. http://houseoflemay.blog-city.com/vermont_has_a_gay_bar.htm

      Feb 11, 2009 at 10:47 am · @ReplyReply to this comment ·
    • Eminent Victorian
      Eminent Victorian

      Economic Crisis . . . doesn’t care if you’re LGBT or not.
      But, I agree that is all the more impetus for gay money supporting gay and gay-supportive businesses. AND it’s all the more reason why publishing the names and businesses of those who back anti-LGBT initiatives is also so important, so we can make informed consumer decisions.

      Feb 11, 2009 at 11:40 am · @ReplyReply to this comment ·
    • cruiser
      cruiser

      Here in Seattle, about a year ago the only Gay bookstore, Beyond the Closet closed after 20 years in business, several of the older bars have closed after many years in business, or they have changed to straight clubs, it is a sad commentary on the current state of things withing the gay community. Everyone is struggling, and few are surviving.

      Feb 11, 2009 at 11:45 am · @ReplyReply to this comment ·
    • Matt
      Matt

      Here in my town there is a local gay owned bookstore. I would support it but the prices are much higher than what I can find on Amazon or another chain bookstore. If his prices were more competitive, I’d be happy to shop there but I’m not going to pay a higher price for something just because it’s “gay”. I feel the same way about paying a higher price for “all gay cruises” when I can go to the same destinations much cheaper on a mixed cruise.

      A gay clothing store recently closed and it was also priced higher than many competitors.

      I’m a capatialist pig and I say to stay in business you have to compete.

      Feb 11, 2009 at 1:33 pm · @ReplyReply to this comment ·
    • Sebbe
      Sebbe

      I support gay business whenever possible even if the price is higher. I personally feel it is worth it and as long as I am able to I will.

      Feb 11, 2009 at 2:39 pm · @ReplyReply to this comment ·
    • Gurlene
      Gurlene

      For those of you who live in towns that have gay business but will not say what the name of the town is you are not doing us a service at all by not saying where you are. I personally would like to get a better feel of how small town gay businesses are doing and it would help to know where they (you) are.

      I question the people who commented on the situation on NYC. Everyday I see street placards on the outside of many a gay bar in the village saying happy hour, 1pm till closing, or 2-4-1 well drinks all day long. Even on Saturdays. One of the largest and oldest video stores in NYC on the Westside Highway @ Christopher street closed at the end of last month due to lack of business. And they had just remodeled the place too.

      Things are beyond bad here in NYC. They are atrocious. Do not be fooled by that. These bars are NOT packing them in like they used to. It has been going on since last summer. Another magazine/video store is going to close very soon and it opened only in September. Things are not rosy at all here. We are no different than out strait counterparts. When money is tight hang on to what you can.

      The only people that will be recession proof is the online underwear section of International Male. No matter what gym queens worldwide will not be caught dead in unsexy underwear. At least that is the way it appears at my gym.

      Feb 11, 2009 at 5:27 pm · @ReplyReply to this comment ·
    • Sebbe
      Sebbe

      @ Gurlene – I spend my time and my pink dollars in Boston (South End), Greenwich, CT & Stockholm, Sweden. Good point that your making though. And although I don’t spend that much time in Greenwich anymore, I do admit I probably don’t spend enough in NYC while I’m there. I guess I assume its even worse in smaller cities like Boston and Stockholm.

      Oh and I think I’m the only person I know under 30 who doesn’t shop online. Maybe once or twice a year a most. It just always seemed so rural to me. For people that don’t really have the option but to go to actual stores.

      In my discussions so far with local business owners Boston seems to be moderately affected. Owners/workers are telling me what they are primarily seeing is a drop of straight customers at restaurants, shops, etc. Stockholm (as of my last trip back a few weeks ago), doesn’t seem affected so far at all. Of course in Sweden the safety net is MUCH stronger than here in this country.

      As a side note, none of my gay brothers and sisters that I personally know have lost there jobs (yet?). As far as the straight ones, I do know a few that have become unemployed. Mostly ones that work in the financial industry or in advertising.

      I’d also be interested what everyone’s experience has been so far.

      Feb 11, 2009 at 5:49 pm · @ReplyReply to this comment ·
    • derrysf
      derrysf

      The recent economic downturn has only increased already relentless pressure on the types of businesses mentioned here. The small independent bookstore, gay newspaper, and even gay bar, have for years now been outdated business models increasingly displaced by cheaper and more efficient resources available online — including blogs like this one.

      Feb 12, 2009 at 2:00 am · @ReplyReply to this comment ·
    • Sebbe
      Sebbe

      @derrysf – at the same time though, the “new” business model has allowed many gays to become successful at the new model. Including David and Jaspy and many, many other successful gay bloggers that would most likely be working for someone else. While these bloggers I’m sure would still have had successful careers without the meritocracy of the net, it has allowed them to have that much more control over their career path and given them a much quicker rise in their fields.

      As far as small independent bookstore, i’m afraid they are past the point of return going forward, but there is still a niche to be filed by those that do it right. Gay newspapers are unfortunately not moving forward fast enough with the times and hopefully some of them will be able to survive. I think one of the most important points is that there two industries are facing the same challenges and difficulties that their “mainstream” counterparts are. Hey, that has to be progress I assume that it is not just the lgbt bookstores and newspapers affected.

      Concerning gay bars, i’m not so sure if I agree with your observation and I think there will be a place for them in the foreseeable future. But, again, maybe its progress. In Scandinavia (where I spend a lot of time), there are not many gay bars and clubs, because it is so accepted that almost everywhere could be described as a “mixed” environment. It would be unheard of in Stockholm, Copenhagen, Oslo for someone to even give a second glance at two men kissing at a restaurant, bar or club.

      I suppose that is the point of equality and progress. Inclusion and not segregation.

      I may just be rambling out of my ass (I haven’t had a full pot of coffee yet), but that is my thoughts. Do you guys agree?

      Feb 12, 2009 at 8:40 am · @ReplyReply to this comment ·
    • mikeandrewsdantescove
      mikeandrewsdantescove

      I saw Frank Marino’s show a couple weeks ago and it’s amazing. He’s jokes are right on. The performances of Madonna, Cher and Michael Jackson was amazing. Plus, I bought he DVD and bonus features of Britney Spears & Whitney Houston.

      Congratulations on 20+ years of running this show.

      Mike Andrews
      Sex @ Itunes

      Feb 12, 2009 at 1:12 pm · @ReplyReply to this comment ·
    • cruiser
      cruiser

      @Sebbe: Europeans have always had a more liberal culture than Americans, we seem to get hung up on all sorts of things, we don’t like to talk about sex(present company excepted of course)when we do it is in “hushed tones” like we’re afraid someone will find out what we like to do behind closed doors, althoug it is becoming more acceptable in a lot of the larger cites around the country to see two people of the same gender kissing, holding hands, etc., but we still are a bit prudish when it comes to the body itself, sure we’ll oogle pictures of half(or completely)naked guys(girls also, just so we don’t get accused of exclusivity)we’ll purchase porn for our personal libraries, we might even go to the occasional strip club(depending on which city you live in). Forgot where I was going with this :(
      Nonetheless it is a difficult time for everyone, maybe it’s time for the gay business world to re-invent itself.

      Feb 12, 2009 at 3:52 pm · @ReplyReply to this comment ·
    • cruiser
      cruiser

      It is a sad commentary when a show that has run for over 20 years has to close due to financial difficulties. Perhaps derrysf is right in his observation that most of the gay owned/operated business’ are running on an outdated & antiquated business model. Get creative, do what Madonna does every few years, re-invent yourself, stay competitive, find that edge again, when you do that will bring not only your older established customers back, it will bring in new ones, a new infusion of life(so to speak)to a “dying” breed.

      Feb 12, 2009 at 3:56 pm · @ReplyReply to this comment ·
    • Bob Witeck
      Bob Witeck

      Japhy, thanks for shedding some light on the gay economy — and the anecdotal evidence you shared.

      Let me offer a few professional observations too.

      First, I want to single out Windy City Times for a very prudent move by one of the community’s best respected publications. Tracy Baim and her staff made a timely cost-saving suggestion to report, write and publish as a virtual news room, and no longer bear the overhead of leased office space.

      Watching the tailspin in the media industry, it is clear to me that more newspapers and magazines are likely to find creative ways to adapt, lower costs and continue their professional work. Sitting side by side at desks is simply not the future model for digital and information-based businesses (like news websites for instance.)

      Other LGBT-owned businesses may be strapped for all the same reasons as the rest of small business owners — fewer dollars in the economy, limited access to lending, and lots of uncertainty.

      I for one encourage us all to think about our buying even more so right now — not to go nuts, but to consider spending a bit extra at an independent gay-owned bookstore like our legendary Lambda Rising (www.lambdarising.com).

      Along with gay bars, our bookstores always have been refuges, community centers and resources to find others, to learn and be entertained about LGBT issues and lives. If they disappear, trust me, all the mainstream book stores in the world won’t include hundreds of excellent LGBT titles and magazines that we need and enjoy.

      I am very happy this subject provokes so much dialogue and attention, and appreciate your taking this on.

      Feb 13, 2009 at 11:09 am · @ReplyReply to this comment ·
    • Jim Evans
      Jim Evans

      I hope the owner of Two Friends located in Burlington VT wakes up before his just opened Bistro gets a bad rap! I am not rating the food at this Bistro, but rather the club it turns into at night. It was a good experience with the people there, great friends made that night as we were up with a bunch of friends already. However the owner when it comes to the club part is a bit of a watcher and also has a problem with younger having a good time in there. Seems to have it drilled in his head that if you are younger you are not responsible. He kicked one of our group members out for requesting a song and then asking over 30 mins later as to when it would be played. A bit of a problem as the owner of the club (at that point). Would not recommend any new people going to this establishment as it seems to be for older locals and if you are new to the area then it is not for you. Hit the bars downtown, much better and just as good and fun people (straight or gay)! This comes from a club owner myself of course he did not know that when speaking with me.

      Mar 3, 2009 at 12:38 pm · @ReplyReply to this comment ·
    • Laurence Bernstein
      Laurence Bernstein

      Only a couple of months ago, in January, the gay world was trumpeting the recession proof nature of the pink dollar. Surveys were purported to show that gays and lesbians were somehow less likely to cut back spending. The reason given, naturally, had something to do with “disposable” income, kids, whatever.

      Of course this was nonsense, as is being seen around the country. Along the same vain as the “disposable” income myth, it seems that gays and lesbians would be more likely candidates for the layoff line because, in the eyes of many employers, they don’t have kids and therefore will be impacted less harshly by a time-out in the unemployment cue.

      Bars will be badly affected very shortly. History has shown that, when faced with serious financial retrenchment, people will eliminate major expenses and up-grade low end indulgences (such as meals out and bar visits) until the impact of the financial strain hits. Then they will cut back entirely. In other words, as soon as the severance check runs out, revelers will go to the bars one night less a week for a few weeks (assuming an average of 3 times per week, this would mean a fairly rapid 30% decrease in the bar business), and gradually cut back more and more until a night out at a bar is a once weekly treat. Or they will buy increasingly fewer drinks. Either way, the prospects for the gay bar business in the next six months or so are pretty grim.

      Mar 9, 2009 at 11:12 pm · @ReplyReply to this comment ·

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