Coronavirus's economic casualties among Jerusalem-area businesses
In a microcosm of Israel’s financial nosedive, we take an in-depth look at four Jerusalem-area businesses struggling amid lockdown.
By ZEV STUBSMALL-BUSINESS owners burn excess stock in protest of corona restrictions, in Tel Aviv on October 29(photo credit: AVSHALOM SASSONI/FLASH90)
Israel is starting to emerge from its second lockdown. Earlier this week, street shops were allowed to resume business after seven weeks of being shuttered. An estimated 80,000 people went back to work as the consumer economy began to sputter back to life.The economic carnage has been massive. Israel’s unemployment rate nearly doubled during the October lockdown, from 11.5% in the first half of September to 22.7% in the first half of October, according to the Central Bureau of Statistics. A year earlier, when the world was “normal,” the unemployment rate was a healthy 3.5%.Meanwhile, analysts at Dun & Bradstreet estimate that nearly 80,000 businesses will close in the Jewish state by the end of 2020, with 60,000 more shutting next year. Those numbers are 70% higher than 2019 closures, with the restaurant, construction and transportation sectors taking the biggest hit.With about a fifth of all Israeli enterprises classified as small businesses, what is the human toll of this crisis on their owners? And what can concerned customers and friends do to help? We asked several Jerusalem-area owners to provide an in-depth look at how their businesses have fared over the past nine months. (Please note that many of the numbers in the following story are self-reported and have not been verified independently.)BAT AYIN RESIDENTS Eliyahu Kanush and his wife Rivkah Adinah have run Holy Simcha Entertainment (facebook.com/SimchaDJIsrael/) for more than eight years, offering entertainment and DJ services for family events, but when the first lockdown began last March right after Purim, everything abruptly came to a halt. Before the pandemic, the Kanushes usually earned NIS 20,000 to 30,000 a month in revenue, enabling them to support their family of eight while paying off business loans of NIS 10,000 a month.“Life was manageable. Not easy, but manageable,” Kanush said.“After Purim, the lockdown suddenly shut all events off. That meant we lost all of our income and we had to give people back their deposits on events they had booked but canceled. Then, once the lockdown was lifted, we had tremendous uncertainty, as people could suddenly go into bidud (quarantine) and cancel their event at any time. We had one event where the bat mitzva girl went into bidud the day before her party, and we had to give back the deposit. A lot of our summer clients were people from outside Israel who either couldn’t get into Israel or weren’t willing to do the mandatory 14-day bidud to come in.ELIYAHU KANUSH and wife Rivkah Adinah of Bat Ayin run Holy Simcha Entertainment. (Photo: Courtesy Holy Simcha Entertainment)“With all that has happened, our business has dried up,” he revealed. “At this stage, people want to start doing events, but they are scared about all the restrictions. Before the pandemic, we usually did 12 to 15 events per month; now, we have just one lined up for all of November.”
“We had taken out a big loan for advertising right before the pandemic started, but the benefits of that just evaporated. An ad we took out in February doesn’t have any value now. So the only money we had coming in was government benefits of NIS 7,000 per month. I was also able to make a bit of money working as my parents’ metapel (caretaker), which allowed me to get some money from Bituach Leumi. Until now, the government wouldn’t let children get benefits for taking care of their parents, but now they wisely made an allowance for that.”Have they attempted to adapt? “We tried doing some events on Zoom, but our product is a live, 3D experience that doesn’t really work on screen. And we’ve tried to pivot into other fields, but that’s not so easy when you have six kids at home from school and you’re trying to figure out online learning, which is a full-time job in itself.“Things got to the point where our credit cards stopped working and we couldn’t pay rent, so we went to the bank to try to get a loan. But the banks are businesses also, and they said our situation was too shaky and they couldn’t help us. Meanwhile, for bureaucratic reasons, our monthly NIS 7,000 from the government has stopped, and we are working to gather the documentation they asked for to get it back.“Eventually, we went to hessed organizations for help. This hurt our pride, but we reminded ourselves we had contributed a lot to society. We had made a point of doing 10% of our events for charity organizations, and we would often do free events for orphans or people without families. So we got donations from Yad Eliezer, and we turned to our friends on Facebook and got some help.”Despite it all, Kanush manages to keep an eye on the bigger picture.“God is good,” he affirmed. “He has a plan for this, and we have to do our part. This has been an opportunity to learn a lot of humility and rethink who I am as a person and as a parent.”BEN DAVID was one of a pair of experienced immigrants who opened Kinamon Catering (kinamon.co) in Jerusalem’s Talpiot neighborhood in July 2016, with a unique business model that was gaining attention.“We used to do a lot of big events, like bar mitzvahs, weddings and brit ceremonies. Before corona started things were going really well. We were getting ready for a really big year in 2020 and had just moved into a larger facility that cost three times as much rent. We had a whole year booked, including our biggest contract ever – a NIS 800,000 project to cater to groups from the US during the summer. And then, all of a sudden, everything went to zero.“We’re a business that does everything on credit. We have credit with our suppliers, and we pay it with the advance deposits clients put down for upcoming events. That all works fine normally. But once the seger (closure) came, we had outstanding credit with the meat company, the vegetable company, the dry goods company, etc, and we couldn’t pay it back because there were no events.“Since corona started, we’ve done only about 10 small weddings. Normally October is the biggest month of the year for our business, but there have been no events due to the seger. We are continuing to do Shabbat catering, but that’s much less profitable because orders are relatively small, and the packing and delivery of food means a lot of extra effort. We still advertise for Shabbat catering, but it means we’re basically working only Fridays.KINAMON CO-OWNERS Ben David (right) and Moshe Herc Holmer at work in the kitchen. (Courtesy Kinamon)“We have eight employees, all olim (immigrants) from all over the world. I didn’t want to lay anyone off, even if that meant taking a big cut, so we keep on cooking, and everyone just makes less money. I stopped taking a salary, and we sold off all our old equipment.“In terms of government benefits, we’re in a category where you get NIS 15,000 every two months, and then NIS 7,500 for the wage of the owner, which is split because I have a partner. So we’ve gotten NIS 22,500 twice over the past four months, which is not even close to what we were expecting to make. The government’s calculation looks only at the difference in your revenues between last year and this year, but it doesn’t take into account the fact that our expenses have gone up 400%.“Small businesses have been very much forgotten by the government. There’s no plan and encouraging businesses to take on more debt isn’t the solution. If we received government assistance paying employee salaries, instead of the Treasury providing more money to workers on unpaid leave, we could work on maintaining our business. I’m willing to work for free.“We are involved in several tzedaka projects to help others. We’re all in this together. The No. 1 thing we all need to remember is that there are many people who have it worse than you.”JERUSALEM NATIVE Udi Epstein was the co-owner of Cafe Michael (facebook.com/cafemichael26), a popular spot in Jerusalem’s Katamon neighborhood. On October 19, after five-and-a-half years of operation, the restaurant announced on Facebook that it was closing. (Michaela, another cafe he owns nearby, will stay open.) “We were in a very good place before corona,” Epstein said. “We were thinking about opening another location. But then we had to close during the first lockdown, and when we reopened, we had to take a loan of NIS 80,000 to make the changes we needed to comply with the new rules. We had to renovate our indoor and outdoor spaces, put in a new dishwasher, add more things in the kitchen and further space out the tables. It was expensive, but it allowed us to stay open.FOR RENT: Cafe Michael, a popular spot in Jerusalem’s Katamon neighborhood that announced its closure in October: ‘We were in a very good place before corona.’ (Photo: Zev Stub)But then, when the second lockdown came, it put us in a situation where it didn’t make any sense to continue.“We realized that even if we reopened, we had at least six months to a year before we could run properly. People don’t sit outside during the winter, and our inside seating can only fit about 15 people or so, so that meant we would be losing money every day during the winter. And it didn’t make sense to continue paying rent until the summer in the hopes that things would get better. So we made the painful decision to close. Our customers are very sad, but we had no choice. We had to fire 30 people.“When we reopened in the summer [after the first lockdown], it took a long time until people started coming back in. I understand that people were afraid to go out again, but that fact made it harder for us to recover.“We didn’t get any money from the government. We had bureaucracy problems that we fixed, but nothing has come in yet. And we still have to pay back the loan we took for the renovations we made.“Our other location in Katamon, Michaela (facebook.com/cafemichael), is still open. We expanded its bakery-cafe format to include Cafe Michael’s best-loved dishes to its menu, with takeout and delivery options available.”FOR AVIGAYLE ADLER, who runs the Open Studio art center (openstudiojlem.com), the pandemic started while she was six months pregnant.“We had 70 kids doing weekly chugim, and we had 130 kids signed up for our Pesach kaytana (Passover camp) when we started to hear about corona. The first thing we did was to run to the art stores to buy supplies to make sure we would have enough. We started making kits to sell for people to use during the lockdown. We turned everything we could into a kit overnight, with materials and instructions.“When events were canceled, it wasn’t clear how finances would work. A lot of parents were happy to exchange some of the money they had paid for chugim for kits instead. But we still had to pay rent and all of our business expenses.“We quickly learned how to do Zoom classes, and had mixed experiences. For our 10- to 15-year-olds, we paired up with some professional artists and delivered materials to the students. It was very successful, but it didn’t work as well with little kids.” AVIGAYLE ADLER with young Open Studio patrons prior to the pandemic. (Photos: Courtesy Avigayle Adler)Still, Adler remained optimistic. In May, she was featured in a Magazine report about Anglo entrepreneurs who were able to overcome the pandemic’s challenges by pivoting toward a remote business model.“I went into early labor after Passover and we tried to remind ourselves that it was a good time to take maternity leave anyway. But then summer was a total disaster. First, we had trouble finding a place and then we scheduled a camp for August. Then we had to cancel it.“In total, I made about one-sixth of what I would make in a normal summer, and our expenses went up, because we needed to have more counselors. Usually, I make 70% of my annual income during July and August.“It was infuriating because I saw people mixing at schools and at events, but we weren’t allowed to do anything. And there was a constant fear – what if someone got corona?Adler says she received a total of NIS 9,000 in government assistance over six months. She was not accepted for a debt forgiveness program because she applied late.Now Adler teaches a few workshops on Zoom, and took a job teaching English at a school in Modi’in to make ends meet. But with a newborn baby and a husband in school, things aren’t easy. The couple recently downsized to a smaller apartment and haven’t paid some of their bills.“A friend lent us money to pay rent, and a generous client in America gave us money to match parent’s chugim payments, so that helped.”Adler looks at the bright side.“I’m in a much better place than a lot of other people. We have Bituach Leumi, I got money for my maternity leave. The pandemic has allowed us to think about new starts and forced us to be creative in other ways.”WHILE THE opening of customer-facing stores and businesses this week was a cause for celebration for many, none of the service businesses we spoke to said they saw any increase in business yet. For them, and others like them, the future is still fraught with uncertainty.
