Why Businesses Fail on The Drag

By Faith Ann Ruszkowski, Samantha Grasso and Ellen Gonzalez

Video by Faith Ann Ruszkowski and Samantha Grasso

Why Businesses on “The Drag” Fail: An Investigation

Story by Faith Ann Ruszkowski

When Noodles & Company closed its location on the corner of Guadalupe and 24th Streets last fall, its departure was abrupt. On Nov. 4 the restaurant was serving pasta, and by Nov. 5 its doors were locked and a note hung on the window thanking customers for their patronage.

Estephanie Gomez, a journalism senior at the University of Texas at Austin, was working for Noodles & Company when it closed. She was shocked when the restaurant went out of business.

“I literally got a text at 10 p.m. the night before that said, ‘Hey, yeah, don’t come to work tomorrow but come and pick up your severance package at 8 a.m.,” Gomez said. “I didn’t catch on—oh, Noodles is doing badly—because we were pretty busy everyday at the same times. I never knew, until the night before.”

While the swiftness of Noodles & Company’s exit might have been shocking, another business deciding to leave the strip of Guadalupe Street, known as “the Drag,” is a relatively a common occurrence.

After Noodles & Company closed in November, The Coffee Bean & Tea Leaf, which was located next door, called it quits. Pita Pit, also located on Guadalupe, closed its doors this spring. Earlier in 2015, Manju’s, Mellow Mushroom, and Jack in the Box, all located on Guadalupe, closed up shop.

Out of the 53 establishments currently on the Drag, 13 have been there for five years or less, according to data gathered from in-person interviews and business’ websites. Additionally six storefronts along the stretch of Guadalupe from 21st to 27th Streets are vacant.

Students like Ilda Arroyo have become accustomed to the high turnover of businesses on the Drag. Arroyo, who graduated from UT in December with a degree in Human Development and Family Sciences, said she noticed the constant change during her five years as a student.

“I remember as a freshman it consisted mostly of food places, but the food places have changed to businesses like the expanding Urban Outfitters, a real estate office, and a small convenience store,” Arroyo said.

So although the high turnover has become commonplace, it raises the question: why are so many businesses unable to succeed on the Drag?

Why Businesses Leave the Drag

This semester, Melissa’s Custom Gifts vacated its location on the Drag next to the long-standing Goodall Wooten dormitory and moved shop to the corner of 24th Street and Rio Grande. The store’s owner, Ken Jones, said that he made the decision to move for many reasons, one of which was that he wanted to discontinue ATX Books, which he also owned and operated from that location.

“One of the biggest things was I had been planning to end the bookstore for a very long time,” Jones said. “I didn’t need as much space, although they didn’t want me to leave because it is really hard to keep tenants on the drag period. But, it was a little bit too much space, a little bit more than what I wanted for what I was doing here, and, of course, the rent on the Drag—anywhere in this area—is very high per square foot.”

However, during his 5 years on the Drag, Ken Jones did concoct some theories about why so many businesses were failing based on personal experience and observation. For many rent is an issue like it was for him, but one of his main observations is that students do not support local businesses.

“The kids do not connect with the businesses that are there, they just don’t,” Jones said. “I ask kids and none of them know a business owner’s name. They don’t have any allegiance of any kind to anything on there. And guess what? Those businesses go out of business…They do not support the businesses that support them. Bottom line. Why doesn’t it work? It’s the students fault.”

He has also observed that business do not understand the UT campus environment.

“They come in with great intentions thinking we’ve got this concentrated amount of 39,000 [undergraduate] students we’re going to make a killing,” Jones said. “They do not do their research.”

Jennifer Hillhouse, the owner of Jenn’s copies which has two locations on the Drag and has been in business since 1982, also said that many stores open on Guadalupe without realizing how dependent their business will be on the students’ schedules. She has had 12 different neighbors since she opened her second location on the Drag near Dean Keeton.

“This is a nine-month business cycle,” Hillhouse said. “It dies in December, a horrible death, and if you have to sell at least 500 hamburgers a day to make your rent that is not going to happen in December and in June and July and halfway through August… It’s a whole town for nine month out of the year and it is a ghost town for the other three and businesses get blindsided by that.”

Matyear pointed to Terra Burger, a now closed business, as a classic example of a business that was not able to anticipate the campus cycle.

“They ran out of buns on Parents’ Day,” said Hillhouse.

What Successful Businesses on the Drag have in Common

Jenn’s Copies is one of the few businesses on Guadalupe that has achieved decades of success. The Co-Op is the longest running business on the Drag, with 99 years of service. The Wooten Barber Shop has been in business for 52 years. These are all businesses that provide services students are always in need of: prints for projects, books and haircuts.

“People have to get their haircut. It’s a destination shop,” Jones said, of his former neighbor.

Don Stafford has been working at the Wooten Barber Shop on the Drag for 23 years aggregating loyal customers all the while. He characterizes the establishment as plain, but reliable and comfortable.

“They come here because they need haircuts, but they also come here because they feel comfortable in the shop,” said Stafford. “It’s not a place where we serve wine and cheese, but come in and tell us how bad your day was or how good your day was.”

The barber shop is remarkably small, but manages to fit three stations into a space the size of the average public restroom. Jenn’s Copies also operates on a small number of square footage. Hillhouse believes modest decorations, reliable service and limited space are key to remaining in business when rent is so high and the business cycle is inconsistent throughout the year.

“When they [the shop next to Jenn’s Copies] turned into a restaurant their finish-out cost $250,000, comparison mine cost $20,000,” Hillhouse said. “I went to TOPS, which is Texas Office Products & Supplies, everything is secondhand…I only had one fancy piece of equipment and it was leased. I did not have a color copier and my husband literally painted my name on a shingle, on a piece of ply board and we hung it outside.”

Graphic by Ellen Gonzalez

“The Drag” through the Years

2100 Block Guadalupe St.

thaispiace

2300 Block Guadalupe St.

attstore

2300 Block Guadalupe St. (continued)

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2400 Block Guadalupe St.

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2400 Block Guadalupe St. (continued)

mellow

 2500 Block Guadalupe St.

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Screenshots from maps.google.com

 

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