Can Gay Businesses Survive the Crunch?

Nearly 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:

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“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.

“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?

There 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.

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?