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Local small businesses close for good due to pandemic

No rent relief from landlords cited as main culprit

By Kehaulani Cerizo 7 min read

PAIA -- After months of being buried under mounting rent payments with no income and no relief from landlords, several Maui small businesses are being forced to close their doors for good.

Marla Mings, of Wailuku, said this wasn't how she envisioned the end of her 14-year-old clothing store Details Boutique in the Queen Ka'ahumanu Center.

"Definitely, it's sad," Mings said Thursday. "It's hard to do, because this is not how I want to close or when I want to close. I've had some customers coming in and crying."

The impending closure and discounted inventory was announced weeks ago. The local retailer plans to cease operations next week.

Details Boutique and Valley Isle Seafood in Kahului; Afterglow Yoga in Kihei and Lahaina; and Sea La Vie and Sailboards Maui in Paia are among the Maui small businesses that have closed or are in the process of shuttering operations.

Horses R Us, which sells riding attire and equipment, placed an ad in The Maui News a week ago announcing its going-out-of-business sale.

Others, such as Aloha Hat Company in Wailea and in Lahaina, recently reopened but may have to close for good because their small businesses are no longer economically viable.

The nation's small businesses most impacted by the pandemic are in Hawaii, according to a recent WalletHub study. Retailers, restaurants, fitness studios and most small businesses were deemed nonessential and forced to close at the end of March due to state and county public health emergency orders. Business reopenings started in phases last month, but they came with costs.

Social distancing rules reduced the number of customers in establishments and forced installation and construction of barriers and separators.

On top of that, many landlords did not provide relief for businesses. The state placed a moratorium on renter evictions during the pandemic -- but that only applied to residential dwellings.

Brana Gavrilovich, who owns Aloha Hat Company with his wife, said the fatal blow for local businesses is rent.

"Our monthly commercial rents are minimum three to four times the national average here in Maui," he said Friday. "So your average space is a minimum of $10,000 per month for an average smaller space. Large ones can be $25,000 to $50,000 per month in premium tourist locations like Front Street, Kaanapali or Wailea, Paia, Makawao. So think of your favorite local ice cream shop, retail store or restaurant and you can guess what they are facing."

Mariko and David Mel, owners of Sailboards Maui, decided April 1 to close when they talked to their landlord and couldn't negotiate a rent reduction. The Mels have owned the Paia surf store for 24 years. The business, hailed as Maui's first windsurf shop, dates even farther back.

"We were just looking at the future and thinking how could we be closed for one, two, three, four months without rent money," she said Friday. "Our rent is so high compared to our payroll that it wasn't going to cover it."

Mariko Mel said they had already weathered the Great Recession of 2008, and the couple did not want to go through another one.

Mings, who owns Details, felt the same way. When she was younger, Mings said she had the energy to endure it. Now the fight isn't there.

"I would be losing thousands every month -- I know what that looks like," she said. "I don't want to struggle and be depressed just to keep my dream alive. I'm smarter than that."

Afterglow Yoga shut down two of three Maui yoga studios for good due to the pandemic and mounting rent with no relief in sight. Owner Jasmine Judson said she initially thought her studios would be closed for two weeks and contacted landlords early on to discuss whether rent options could be found.

"My landlords at my Kihei and Lahaina location refused me any abatement or support, even after I explained that we would not be able to sustain the continued costs. They refused to budge or compromise at all," Judson said Friday. "After we had been closed for six weeks, I knew that the costs that were accruing week by week would make it impossible to ever open these locations again."

Judson said her yoga studios are a labor of love and most income gets reinvested in the business.

"We don't have endless weeks of expenses saved up with the anticipation that we will have zero income coming in," Judson said.

Afterglow Yoga's flagship location in Wailuku reopened last week and was well received, she said. However, Judson is uncertain about whether she will ever open additional studios.

"It is hard to say," she said. "One of the reasons I opened my first studio was to have a business that truly supported the local people of Maui. I'm born and raised here and saw how so many businesses were catering to tourism, and I really wanted to create something for the island family I love so much."

The owner of Sea La Vie, a local gift shop in Paia, pointed to rent and pandemic challenges as the reasons for closure. Patti Pottorff said she will not reopen a physical location but is in the process of switching to online sales.

Valley Isle Seafood market announced Friday via Facebook that it was temporarily closing and that its last business day will be today.

"As you all may know it has been a struggle to stay afloat," the announcement said.

Gavrilovich's Aloha Hat Company, which employs three to five employees, is trying to avoid Valley Isle Seafood's fate. They are struggling to stay alive.

He urged government entities to create incentives for landlords to eliminate past rents from April to June and to lower ongoing rents until the end of the year.

"Other governments like Canada, Australia, New Zealand and most of Europe have passed laws that do just that, mostly through tax incentives and forgivable loans," he said. "Unless the government passes laws for this to change, the landlords will not or cannot help. Why should they?

"But right now the small business, which is the backbone of the economy and employs the largest percentage of people, is taking all the risk and losing all the money as every month passes."

Gavrilovich encouraged people to shop locally to support small businesses on the brink of failing.

"Every time people are lining up at Ross or Walmart, who are they really helping?" he said. "It's not just my business. We work with local artists and suppliers and everything. It's a domino effect."

Maui County Mayor Michael Victorino recently announced the launch of the county's Kama'aina First website, which allows local businesses to share for free their kamaaina deals. A county news release said more than 250 businesses are participating in the program.

County Office of Economic Development Director JoAnne Inamasu did not reply to a request for comment on the program.

In 2017, Maui County had nearly 22,000 businesses with 499 or fewer employees, the most recent U.S. Census Bureau estimates said. Small businesses are defined as privately owned corporations, partnerships or sole proprietorships that have fewer employees and/or less annual revenue than regular-sized businesses.

* Kehaulani Cerizo can be reached at kcerizo@mauinews.com.

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