Post-attack sales plummet at Waikiki eateries, shops

By Andrew Gomes
Advertiser Staff Writer

Samantha Vo, a saleswoman at a Pearl Factory booth in the International Marketplace, said business has decreased sharply in recent days. Other shops dependent on tourism also are hurting following the terrorist attacks. Richard Ambo • The Honolulu Advertiser • • • What can Hawai'i do to cushion the economic fallout from the Sept. 11 terrorist attacks? Join our discussion.

These are some initial signs of the tough times now facing restaurants and retailers that depend on tourists for business — especially those in Waikiki, the state's main visitor destination, which has looked like a virtual ghost town in recent days.

A week after the most devastating terrorist attacks on American soil and the crippling disruption of air travel, sales at restaurants and retailers in Waikiki have fallen by as much as half.

But although visitor-oriented eateries and shops haven't suffered as significantly as the nation's major airlines, which continue to announce severe cutbacks and layoffs, they are scrambling for their own ways to weather the downturn.

The duration and effect of the drastic drop is still uncertain, but if it drags out or intensifies, this slice of the local economy that employs thousands will suffer. Some businesses, including corporate chains and mom-and-pop operations, will have to lay off employees. Weaker companies could fold, industry observers said.

Mike Windsor, president of McInerny Ltd., which has nine stores in Waikiki, said he's looking at modifying hours of operation, employee scheduling, computer systems and even merchandise buyer expenses.

"You've got to look at every aspect of doing business," he said, mentioning that residents get 15 percent off regular- and sale-priced merchandise.

'We're in trouble'

Pat McCain, president of the Hawai'i Restaurant Association, said the industry he represents operates on some of the slimmest margins. "When our customers slack it up a little bit, we're in trouble, and now our customers are slacking it off a lot," he said.

Hence the urgency to trim expenses at the five Waikiki restaurants co-owned by Scott Rolles.

Rolles, who operates Sunset Terrace, Chuck's Cellar, Pepper's Waikiki Grill & Bar, Chuck's Original Steak House and Chief's Hut, is considering everything from not fixing leaky faucets to curtailing advertising.

Reducing employee scheduling will be particularly hard. "Everybody's screaming for hours already," he said. "It's going to be a problem."

But he added: "That's about all we can do, because we have a limited ability to help the sales side of the equation. We're going to hunker down and try to weather the storm, and try not to waste money. We're worried."

Paul Kosasa, president of ABC, is equally in the dark about what lies ahead. "We're gonna just try to survive," he said.

So far, ABC has reduced store hours from an average of 17 to 16 a day, a change amounting to significant savings when multiplied over 51 stores, 37 of which are in Waikiki.

Kosasa said he's not contemplating any other changes because no one knows what's going to happen in a few weeks. "For me it's just a lot of uncertainty," he said.

That uncertainty has fueled a voracious demand for visitor arrival forecast information when little is available beyond this week's airline and hotel cancellations.

David Allaire, senior vice president of TS Restaurants, operator of Duke's and five other Hawai'i eateries, has been in close contact with several hotels so he can best adjust business to meet visitor demand.

TS, which suffered a 20 percent sales decline since last Tuesday, plans no layoffs of its 900 local employees. Still, the company has frozen hiring and probably will delay any cosmetic upgrades as well as monitor inventory closely, Allaire said.

"We'll be counting napkins," he said. "Any unnecessary spending is suspended. You need to plug up all the leaks."

Few Japanese visitors

Yesterday, duty-free retailer DFS Hawaii reduced its hours of operation at its flagship Waikiki store by three after assessing visitor arrivals from Japan, its main supplier of customers.

The company, which employs about 1,300 people, accordingly trimmed worker shifts and asked some to take voluntary leave if possible.

Sharon Weiner, DFS Hawaii group vice president, said the company had been trying to reassure employees of their value and the appeal of Hawai'i as a visitor destination, but the sudden dearth of Japanese visitors made changes unavoidable.

"You want to offer comfort, but you can't because you don't know who's arriving," she said. "Business is terrible. It couldn't be any worse. There are only a few hundred Japanese arriving every day where there used to be thousands."

Business down 20 percent

Hilo Hattie, a retailer that typically shuttles a lot of its customers from Waikiki to its main store on Nimitz Highway, has seen sales fall by about 20 percent, according to Darrell Metzger, company president.

Hilo Hattie has cut back work hours among its 700 employees at 13 stores, including more than 500 employees at nine stores in Hawai'i. Metzger said if business appears headed down further, say by 40 percent or 50 percent, Hilo Hattie may need to implement permanent layoffs.

"For the short term we're ready for a 20 to 25 percent drop," he said. "If it goes higher than that, then we have contingency plans to cut back further."

Just how far and in which areas retailers and restaurateurs rein in expenses will be an issue in the coming weeks.

"Right now, it's day to day," said Weiner of DFS. Added restaurant owner Rolles: "Where do you draw the line? That's the question of the week."

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.