Highland Park Cafeteria's announcement to permanently close this week is hard for many to wrap their mind around.
It's been a part of the Dallas community for 95 years.
However, Friday is a reminder they're closed for good as they kick off an online auction that will let you take home memorabilia from inside their restaurant to remember them by.
This week has been filled with similarly grim announcements for beloved and iconic businesses in the metroplex. Music venue Lizard Lounge will close after almost 30 years in Deep Ellum. Bird Café, a community favorite in Fort Worth’s Sundance Square, confirmed to NBC 5 on Thursday that it will close for good on May 22 after seven years in business.
The latest news from around North Texas.
Plano-based JC Penney is planning to file for bankruptcy protection, people familiar with the matter tell CNBC.
These closures are something the Better Business Bureau and financial experts are following closely.
The BBB Serving North Central Texas said it is seeing a huge increase in the number of company closures and bankruptcies reported in their database. In fact, the BBB recently released an impact report about COVID's effect on businesses.
Of the more than 1,300 BBB Accredited Businesses surveyed between March 23-27th, 70% believed the coronavirus outbreak would have a significant negative impact.
“More than half of business owners surveyed say they do not have enough cash or credit to last them past 60 days should another unexpected crisis arise,” said Phylissia Clark, vice president of Public Relations & Communications for the local BBB.
Dallas-based financial advisor Spencer McGowan, president of McGowan Group Asset Management, said that is the key to these closures. It's something many businesses just simply didn't expect.
"“If you didn’t have 90 days’ worth of cash reserves, this was catastrophic. And when they couldn’t see a path forward they had to make a decision,” he said. “It’s tragic. The bottom five percent, certainly with restaurants, hotels -- you're probably looking at one and 20, maybe one in 10 depending on the region -- that is probably considering shutting their doors and not trying to reopen."
He said insurance companies are another factor at play that is hurting businesses because policies aren’t recognizing the coronavirus or the pandemic as part of the fine print for coverage.
“We have reports that business insurance companies are not honoring claims for business disruption. And that’s a big issue,” McGowan said.
The BBB data shows small and newer businesses are at high risk, especially among companies with 10 or fewer employees and in business for less than six years.
The BBB said access to capital to ride through this period would make a tremendous difference in helping businesses stay open. Companies are also changing the way they do business to survive – from eliminating expenditures, leveraging technology, or adopting a work-from-home practice for employees. While 36% of businesses say they will likely reduce staffing, 30% of business owners tell BBB they will have to change or adapt to a new business model.
Clark said locally in Dallas-Fort Worth, it appears that restaurants and department stores are also suffering tremendously.
“Industries that operate on narrow margins like restaurants are particularly at risk. Also, industries that were already struggling to keep up with a changing marketplace were hit even harder, like department stores,” she said.
The BBB report revealed the industries that have been hardest hit in North America, ranked by the number of complaints:
- Travel Agency
- Online Travel
- Vacation Rentals
- Property Management
However, for some industries, it's a different story.
BBB data shows construction, remodeling, and building trades are most likely to report a positive outcome with sales and growth.