Local Businesses South of Campus Struggle to Keep Up

Photo: <b>Southside businesses</b> near campus must pay a premium for their locations. National chains are more able to pay these high rents and are slowly edging out local businesses in the area.
Michael Kang/Photo
Southside businesses near campus must pay a premium for their locations. National chains are more able to pay these high rents and are slowly edging out local businesses in the area.

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After 28 years of business, the Sufficient Grounds cafe is set to close its doors today. But more than just the loss of award-winning sandwiches and coffee, the closure represents a growing trend in which independently-owned businesses on Southside are forced out as big chain stores move in.

High rent, problems with property owners and a decline in student purchases have dealt a blow to smaller, locally-owned businesses in the area just south of UC Berkeley.

"I haven't been able to make money for the past two years," said Anthony Tasoulinh, the cafe's owner, who has decided not to renew his lease this year. "I've only been able to break even."

Despite the cafe's difficulties, the number of independently-owned businesses citywide has remained high over the years, according to Michael Caplan, the city of Berkeley's economic development manager.

"Overall, there isn't a trend towards more chain stores," Caplan said. "We tend to promote local businesses because it's one of our greatest assets. Berkeley people, by and large, tend to appreciate that fact."

Most business districts in the city reflect this. Downtown Berkeley has seen fast food chain restaurants such as Baja Fresh, Burger King and Kentucky Fried Chicken close down over the years. And about 60 to 70 percent of businesses in the district are independently owned, according to Deborah Badhia, operations director of the Downtown Berkeley Association, who added that the statistics are likely representative of the city in general.

However, on Southside-an area teeming with students and tourists-high rents have allowed big chain stores to edge out independent businesses.

"As you get closer to (foot) traffic, the rent gets higher," said Roland Peterson, executive director of the Telegraph Avenue Business Improvement District. "And it's the national chains that can afford the rents."

The American Apparel store on Telegraph Avenue and Bancroft Way-the busiest intersection for pedestrians in the East Bay-is an example of this. The clothing store opened in 2004 and has since opened at a nearby location also on Telegraph.

Lauren Oldani, co-manager of the two stores, said the Los Angeles-based company has the kind of financial backing that has allowed it to expand.

"If we'd opened up (farther down Telegraph), we wouldn't do as well," she said. "All of the bigger businesses are on this block as opposed to further down."

South of Durant Avenue, the Telegraph district is increasingly populated with independent businesses, where rent is generally less expensive. Peterson cited Blakes and Mars Mercantile as examples.

But for independent businesses located closer to campus, keeping up with rent is a greater struggle.

"Rent is too high in this area," said Jatinder Malhotra, husband of the owner of Riya Beauty Parlor, located in Sather Lane.

He added that his rent increased by about 4 or 5 percent every year.

"You're basically working for the landlord if you're not taking any money home," he said.

Businesses near campus such as Sufficient Grounds face other obstacles in addition to high rents. Their prime location also means they are more dependent on students, who generally spend their breaks at home or abroad.

"Rent is still high on the slow months," Tasoulinh said. "I can't pay rent over lunch rushes."

Tasoulinh added that he used to pay $7,700 a month for rent. Offers from Rue-Ell Enterprises to lower the payment were rejected, according to Carlo Battino, the company's vice president. A Craigslist posting currently advertises the space for about $6,831 a month.

In addition, independent businesses must contend with large chains, which often feature more effective business models.

"When a chain comes in, it's because they know they have a certain kind of style that is shown to work," Peterson said.

For instance, a Yogurtland franchise opened up across campus on Bancroft in May. Huong Vu, the store's general manager, said the corporate office approved the location because of its access to the company's targeted demographic of 18- to 25-year-olds.

Since Yogurtland's opening, nearby Yogurt Park has seen a dip in profits, according to owner Marty Piscovich.

Piscovich said that in his 33 years in Berkeley, the loss of independent business has changed the flavor of the city. But he added that his business nevertheless remains steady.

"The pie is only so big," he said. "We've been around for a long, long time. I'm not going anywhere. I've got another 33 years left."


Denise Poon covers local business. Contact her at [email protected]

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