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NVDaily

Hard Times: Area businesses have hope in hard times

Editor's note: This is the seventh in a series of stories about how the recession has affected the lives of Northern Shenandoah Valley residents.

By James Heffernan -- jheffernan@nvdaily.com

STRASBURG -- The golden arches at the town's scenic northern gateway are a little harder to spot these days, tucked away in a gas station-convenience store just off the busy interstate.

A new Denny's sits across the street, and an Italian restaurant and a Chinese buffet have opened in a nearby commercial center. Burger King and Arby's also line the growing corridor, which counts among its recent developments two hotels, a quick-care clinic, a few upstart neighborhoods and a 57-acre plat for a planned retirement community.

McDonald's franchise owner Terry Elliot has watched this section of U.S. 11 blossom over the years. The economy may have turned south and the landscape more cluttered, but his Strasburg restaurant still draws a crowd, particularly during peak breakfast and lunch hours, when the dining room tables are full and the drive-through line stretches around the building.

"Times are tough," Elliot concedes. "Folks are watching their money more carefully. ... Even travelers are packing their lunches and are less willing to spend their cash."

Yet McDonald's has stood tall in this recession, offering value, convenience and comfort food to cash-strapped consumers. The fast-food chain was one of only two major publicly traded U.S. corporations -- the other being Wal-Mart -- to post a year-over-year increase in earnings in 2008, and so far this year it has gained market share in the U.S. by focusing on classic menu favorites like the Big Mac and introducing a line of budget-friendly espresso drinks.

"We're offering [the customer] a wide variety of choices ... a lot of healthy choices and inexpensive menu options," Elliot says.

Sales are up at his three West Virginia franchises -- Moorefield, Romney and Petersburg -- while receipts at the Strasburg location are on par with this time last year.

"There's a bigger pie here now, so there are more hands in it," he says. "But the more choices you have, especially being off the interstate, the better off you'll be."

***

The term "recession-proof" is tossed around whenever the economy is mired in a slump.

Traditionally, the label has applied to businesses and industries that provide basic necessities, such as food and clothing; cheap entertainment -- books, movies, even alcohol and gambling -- or a valuable service.

But every business is a function of the niche it serves and the
community in which it operates, according to Miles K. Davis, professor of management at the Harry F. Byrd Jr. School of Business at Shenandoah University.

A new restaurant in Detroit, for example, where the auto industry is reeling and unemployment reached 17 percent in June, would be less likely to turn a profit than a similar eatery in Arlington County, where government contracts are plentiful and the jobless rate is under 5 percent.

Davis says businesses looking to survive in a down economy should focus on the fundamentals: controlling costs, differentiating their product and retaining customers.

Technology has made it easier to control costs, Davis says. Laptop computers and cell phones allow office workers to be more mobile and can help a company reduce its overhead.

"It used to be the corner office was a prize," he says. "Now [with technology], my corner office can be the beach."

Customers are looking for value in this economy, Davis says. "They have only limited dollars to spend, so any purchases have to have a value-added [component] and be sufficiently differentiated from a similar product or service."

In addition, retaining customers takes on added significance in a recession because 80 percent of your business may come from only 20 percent of your customer base, Davis says.

"It's not that you need to do anything special during difficult times," he says, "If you take care of the fundamentals, then you'll be good through the difficult times and the good times."

***

The focus on value and variety at McDonald's isn't the only business model for the restaurant industry.

Woodstock Cafe has seen steady growth since its opening in 2005, and revenue is up so far this year, in part because of its owners' willingness to change.

"When you stand still, you're really falling behind," says Coe Sherrard, a former theme park manager who came to Woodstock with his wife, Jean, to retire.

The couple started out selling coffee, baked goods and sandwiches, but they've since added a wine shop, tastings and live entertainment on Sunday afternoons.

"The previous owner had indicated that Sundays were a lost cause, but Sunday quickly became our second- or third-best sales day," Sherrard says.

In March, Woodstock Cafe began opening for dinner on Friday and Saturday nights in conjunction with its partner, CrossRoads Catering. "Cafe Nights" features a limited, gourmet-style menu that changes weekly. Customers may choose the four-course, fixed-price option -- appetizer, soup or salad, main entrée and dessert -- or order a la carte from the menu.

"We're trying to create an experience," Mrs. Sherrard says. "In this economy, that's what people will remember."

They've also cut costs by using washable glassware for dine-in orders, bargain-shopping for food and supplies -- using local vendors whenever possible -- and occasionally sending employees home early when business is slow.

But the Sherrards also have kept their prices and their hours stable during the downturn, a fact they say their customers appreciate and keeps them coming back.

"We're blessed to have a loyal customer base, not just in Woodstock, but the weekenders [from Northern Virginia] as well," Mrs. Sherrard says.

There also is very little turnover among the cafe's 16-member staff, which includes single moms and Lord Fairfax Community College students.

"The goal is just to hang on and get through it," Sherrard says of the recession. "We've set up our business strategy with that in mind."

***

Summer Berry was working for a green building-supplier in Winchester and her sister, Suzie Herring, was a bartender and bookkeeper at the local Moose lodge when the two decided to open a consignment shop this past spring.

They had grown up shopping with their mother at secondhand stores and yard sales, and now that they are both mothers, they buy things on consignment for their own children.

"My 7-year-old loves it," Berry says.

In a down economy, consignment shops like Finders Keepers at 2014 S. Loudoun St. provide a valuable service for both patrons and those looking to clean out their closets.

"With the economy making us all more aware of our spending, consignors can make a little money off of their older items and shoppers can buy items they need at a great price," Berry says. "Also, with the green movement, more people are conscious of trying to reuse other items before purchasing new."

Finders Keepers, which held a grand opening June 1, now has more than 2,000 items in stock, from clothing, accessories and jewelry to books, furniture and home decor, and its inventory is constantly changing.

"It's like opening a present every day," Herring says.

For a $5 annual fee, consignors can bring in as many items as they want for resale. The shop agrees to post the merchandise for the owner for up to 90 days in exchange for a cut of the final sale price. Any unsold items are donated to one of a handful of local organizations including Goodwill, the Salvation Army and CCAP.

One local woman has more than 400 items on consignment at Finders Keepers.

"She's practically a member of the family," Herring says.

Finders Keepers is located in the center of what the sisters refer to as Winchester's "Consignment Shoppe Hop," which includes the SPCA thrift shop, the Salvation Army, Twice is Nice and the Blue Ridge Hospice Thrift shop.

"People can go to multiple secondhand stores in one area," Berry says. "Plus it's green, it's eco-friendly and you're keeping the money local."

***

Other area companies and organizations have positioned themselves well to survive the downturn and emerge even stronger.

Edinburg-based Shentel, which provides local and long-distance telephone, cable TV, high-speed Internet and other telecommunications services throughout the mid-Atlantic and Southeast, has had only two quarters of negative growth in the past two years.

While it relies on its Sprint-branded wireless business for the majority of its revenue, the company also has cut its less profitable business segments, added telephone and cable customers through acquisitions, upgraded its existing networks and expanded into fiber-to-the-home systems.

"We believe these improvements ... will position us to lead the industry when economic conditions improve," President and CEO Christopher French says.

Meanwhile, Valley Health, the region's largest employer, continues to grow.

The regional health care provider began the year by bringing Page Memorial Hospital in Luray into the fold, giving it five member hospitals and continuing a recent trend of acquisitions that carry commitments to build new facilities.

Valley Health also is looking to acquire and build a new War Memorial Hospital in Berkeley Springs, W.Va.

Last year, the system, which has over 5,100 employees, hired 884 people, and this year it is on track to hire another 800.

* Next: What will recovery look like?




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