JACK YANG – APRIL 18TH, 2024
EDITOR: SOPHIE NIU
As the warm embrace of Spring welcomes us once again, it’s hard not to reflect on the stark contrast to four years ago, when the world was under the shadow of COVID-19. While Zoom lessons, mask mandates, and stay-at-home orders feel like distant memories, small businesses in Berkeley continue to bear the scars of the pandemic and must navigate a landscape transformed by unprecedented challenges. Among them, Xpression, a newcomer on the scene, navigates a Berkeley vastly different from its pre-pandemic self. The influx of large corporations into Berkeley, dwindling local government support, and shifting academic habits — with online enrollment rising to 170% of its pre-pandemic level — paint a daunting picture for small businesses striving to survive.
COVID-19’s arrival marked an era of profound economic turmoil, casting long shadows over businesses globally, nationally, and particularly in local ecosystems like Berkeley. The World Bank highlighted a sharp contraction in global GDP by 4.3% in 2020, underscoring the widespread economic fallout. This global crisis reverberated through Berkeley, ravaging a city formerly known for its vibrant small-business community. It was in the aftermath of COVID-19, in October 2021, that Xpression was founded on Euclid Avenue by owner Ravin Arora.
Arora moved to Berkeley in 2021 with two decades of experience in the food and beverage industry under his belt. Drawn by his son’s enrollment at Cal, Arora began a family business with a clear mission: to provide Indian fusion cuisine that resonated with the students and faculty of UC Berkeley, offering a sense of comfort and familiarity to a world still adjusting to the new normal.
Xpression wasn’t exactly started in a perfectly stable business environment. According to Arora, “On Euclid Avenue alone, there was an 86% turnover rate among restaurants during the pandemic.”
Through an economic lens, the staggering turnover can be explained by the demand shock caused by the significantly reduced consumer spending in physical storefronts due to lockdowns and a swift pivot to remote living. Businesses, especially those reliant on foot traffic that brought inflows of eager college customers from UC Berkeley’s once-thriving campus life, found themselves grappling with an abrupt halt in customer flow. Even more, disruptions in the supply chain from the pandemic further exacerbated the situation, with global lockdown measures causing delays and shortages, impeding businesses’ ability to provide goods and services. Additionally, the heightened operational costs stemming from the need to comply with California’s stringent health and safety regulations placed an unsustainable financial burden on many. Investments in sanitization measures, protective gear, and modifications for social distancing, while necessary for public health, added layers of costs during a period of drastically reduced revenues.
Despite these very novel challenges, Arora was confident in his experience to pull him through. For him, the intricacies of marketing and impressions posed no different threat: “Honestly speaking, I don’t track foot traffic.” He explains, “I’ve been in the business (for the) last 40 years, and when I stand outside (and) see the hustle and bustle, I (can) calculate when (the business) is viable and when it is not.”
Arora’s confidence extends to how he views competition within the local market. Despite the presence of other Indian restaurants on Euclid Ave and the increasing pressures from the presence of larger corporations, his stance is clear: “We have confidence in our brand, our marketing, our food. I don’t care about the competition, even (on Euclid) there are 4 Indian restaurants. I don’t have any competition with anyone. Our product is our product.”
Yet, his confidence doesn’t negate the recognition of broader systemic challenges, such as the need for more supportive measures from local authorities in Berkeley. The call for enhanced government support underscores a critical aspect of the struggle faced by small businesses in the area. “Honestly speaking, Berkeley could do more to support businesses, yes,” Arora notes, highlighting a common sentiment among local entrepreneurs seeking a more conducive environment for their ventures to flourish.
On the opposite side of this sentiment, large corporations, with their vast resources and scale, are able to weather economic downturns more effectively and compete aggressively on price and variety, making it difficult for smaller establishments to maintain their market share. Xpression and other small businesses in Berkeley face the formidable challenge of increasing encroachment from large corporations. Arora points out this trend, noting the growing presence of large corporate-run restaurants and retail outlets that directly compete with local businesses like his own. This challenge is compounded by what many local entrepreneurs perceive as inadequate support from the local government. Despite the unique role that small businesses play in contributing to the city’s culture and economy, there seems to be a gap in targeted assistance or policies that could help level the playing field. The lack of substantial local government initiatives to buffer the challenges posed by corporate competition and regulatory burdens has left businesses navigating these waters largely on their own.
Another significant hurdle comes from the changing academic habits following the pandemic, with a notable shift towards online learning among students at UC Berkeley. This shift has led to a decrease in foot traffic around campus areas, including Xpression’s neighborhood of Euclid Ave. and the larger Northside area. Previously, these areas thrived on the constant flow of students, faculty, and staff seeking dining and shopping experiences between classes or campus events. However, with more students opting to stay home and attend virtual classes, the once-reliable stream of customers has dwindled. This decrease in foot traffic challenges Xpression and other similar businesses to find new ways to attract customers, highlighting the need for innovative strategies to adapt to the changing landscape. The persistence of online learning modalities and the uncertainty about future academic formats raise questions about the long-term viability of business models heavily reliant on campus proximity.
In the quest for survival, small establishments are employing a variety of inventive strategies. One such approach is geographic expansion, an initiative that could potentially safeguard the business against localized downturns and tap into new customer demographics. Arora articulates this ambition, stating, “When we find good opportunities that open up on southside… that is in the pipeline too.” This strategic move could allow Xpression to capitalize on the less saturated markets and potentially more affordable rents on the south side, thereby bolstering their customer base and spreading operational risks.
Another pivotal strategy for survival is the integration of technology and embracing the digital marketplace, even when it’s outside the comfort zone of business owners. Xpression, for one, has largely relied on the traditional word-of-mouth approach:
“Honestly, I am 60, and not a technological guy. That sometimes confuses me, so I don’t depend on it. I depend on my word-of-mouth convention,” said Arora.
However, Arora acknowledges the power and necessity of digital channels and is open to employing external expertise to capture the digital audience: “Sure, I am not educated in the tech business. If I can find digital marketing on Snapchat, TikTok, whatever the platforms there are, I would love to pay them a reasonable cost if they work to boost our sales.”
Small businesses can utilize social media and online ordering platforms to engage with a broader, tech-savvy consumer base, potentially increasing their visibility and customer base. This digital transformation can lead to a better understanding of consumer behavior through data analytics, menu optimization, and more effective targeted marketing campaigns, all of which can contribute to increased efficiency and heightened customer satisfaction.
Lastly, forging strong community connections can be a lifesaver for small businesses. Establishing partnerships with local suppliers, collaborating with other businesses for cross-promotions, and participating in community events can enhance visibility and embed local businesses more deeply into the fabric of Berkeley’s culture, as establishments such as Top Dog have done. Additionally, building a loyal customer base through exceptional service and unique offerings can turn first-time visitors into regulars. By prioritizing customer engagement and nurturing a sense of community around their brand, businesses like Xpression can create a buffer against the competitive pressures of larger corporations and the volatile shifts in the market.
In the wake of the pandemic, Berkeley’s small businesses face a crossroads, and their future is contingent on various factors. They must navigate a landscape altered by shifts in consumer habits, economic pressures, and the incursion of large corporations. The fate of these businesses is uncertain, but we can explore two possible outcomes: failure and survival, each with its own implications for the community and consumers.
Should small businesses in Berkeley falter, the impact would reverberate throughout the community. The failure of these establishments could lead to a loss of local character and cultural vibrancy that these unique businesses bring to the city. Imagine, for one, a Berkeley without the Asian Ghetto, Top Dog, or Artichoke’s! We may see a homogenized commercial landscape, dominated by chain stores and franchises, which often lack the same level of personal touch, customer service, and distinctive product offerings that small businesses are known for.
For consumers, this could mean fewer choices and a decrease in the quality and diversity of products and services. The long-term consequences may include a reduction in the economic resilience of the local community, as money spent at large chains often leaves the area, whereas small businesses are more likely to keep profits circulating within the local economy.
Conversely, if small businesses like Xpression overcome the present challenges, it could spell a bright future for Berkeley’s commercial diversity. Survival may involve adaptation in various forms, such as embracing technology for marketing and sales, diversifying product offerings to appeal to a wider audience, or forming community alliances to bolster local support.
For consumers, the enduring presence of small businesses could mean a sustained variety of unique and personalized products and services. It would likely contribute to the preservation of Berkeley’s distinctive atmosphere and community-oriented culture. Economically, a thriving small business sector can foster local job creation, stimulate innovation, and ensure that more money stays within the community, supporting other local enterprises and public services.
Ultimately, the trajectory of small businesses in Berkeley will hinge on the ability of business owners to adapt to a changing environment and on the willingness of consumers, local government, and other stakeholders to provide the necessary support. The resilience of businesses like Xpression serves as a testament to the potential for success even in the most challenging circumstances.
In the shadow of a post-pandemic world, small businesses in Berkeley like Xpression stand at a pivotal juncture. The narrative of these establishments is one of resilience, a testament to the unyielding spirit of local entrepreneurs who, like Arora, have adapted to an altered commercial reality. Arora’s journey with Xpression underscores the thesis that small businesses can indeed survive—and even thrive—despite the influx of large corporations, the wane of local government support, and the dynamic shifts in consumer behavior.
“I believe the most important thing in the food industry is this: serve fresh food at reasonable rates, and the customer will come,” Arora said. “Everybody wants freshness, flavor, and taste, with good customer service.”
Featured Image Source: Postmates
Disclaimer: The views published in this journal are those of the individual authors or speakers and do not necessarily reflect the position or policy of Berkeley Economic Review staff, the Undergraduate Economics Association, the UC Berkeley Economics Department and faculty, or the University of California, Berkeley in general.
