Businesses fail all the time, it’s the painful part of capitalism. That being said, small business shouldn’t have the deck stacked against them by the government.
The ‘Ye Olde Butcher Shoppe’ in Midtown Detroit (the growth area in Detroit) failed after being in business for 18 months. The main reason the small business failed is due to competition from big box retailer Whole Food Market and Meijer moving into their area which, by the way, took a whole lot of corporate welfare to make happen.
Via MCT (6/5/2013):
15 years to build a grocery store. Not only 15 years, it also took a whole lot of corporate welfare as well:
Despite the store’s prominent neighbors, it took a lot of heavy lifting to complete the deal. The $12.9 million Whole Foods store was financed with $6.1 million in equity from Ram and Whole Foods. Ram contributed 1.9 acres of land for the store valued at about $1 million, said Peter Cummings, chairman of Ram. The remaining $5.8 million came from state and local grants and the sale of tax credits tied to the project.
Whole Foods should send Michigan taxpayers a big thank-you note.
Even though Whole Foods moved into their neighborhood (with a ton of corporate welfare) our hard working entrepreneurs cite several additional reasons for going under that are worth reviewing:
“There is no doubt that when (Whole Foods) opened, our sales dropped by 60% and have remained close to that ever since,” the brothers said in statement posted Saturday on the store’s website. “We knew when they announced their store in Detroit that we would have to evolve quickly once they opened.
“We were close to acquiring a package liquor license and wanted to expand the craft beer and fine wine which really found a loyal audience,” the statement said. “We designed the store to be a one-stop food and beverage destination but that would take time and money, and with our high labor, leasehold, and utility costs, we couldn’t survive long enough to make the necessary changes and additions.”
“From the beginning, we supported the Whole Foods project because we believed that in the end, the city would need that just as much as our store. No city thrives with one dimensional retail. But in short term it did eliminate our chance. We were also a bit blindsided by the lower pricing structure Whole Foods was able to put in place at the Midtown store.
The State of Michigan bureaucracy slowed the entrepreneurs from obtaining a package liquor licence. Also, the State of Michigan established a Renewable Energy Standard that’s responsible for driving up electrical costs and lastly, the minimum wage law that drives up labor costs.
I wonder workers at Ye Olde Butcher Shoppe would take a temporary pay cut to something less than minimum wage in order to keep their jobs in the long term? Not that the owners of the Butcher Shoppe could make that offer, it’s against the law.