For a glimpse of how a city is faring in its reopening, look closely at its dry cleaners.
Take J’s Cleaners, with locations dotting Midtown and Upper Manhattan. Last month, business was up to as much as 40% of pre-pandemic levels as a small portion of New Yorkers returned to the office, said owner Albert Lee. Some locations were even back to half of what they made before Covid-19. With new business restrictions and schools closing again, Lee expects to fall back down to the low levels he’s seen back in April.
“If this thing keeps dragging, many small businesses will close. Maybe I could be one of them,” said Lee, 63, who plans to permanently shutter four of his 15 locations. He is losing $1,000 to $2,000 monthly per store.
Dry cleaners are hardly alone in struggling during the pandemic. But while airlines and restaurants eventually will rebound as vaccines ease worries for travelers and diners, dry cleaners confront a more fundamental shift: Working from home is here to stay, especially for white-collar employees. Companies from Facebook Inc. to Swiss bank UBS Group AG have said the switch could be permanent for some workers.
A post-Covid economy in which more people work in their sweatpants instead of freshly pressed dress slacks could be devastating for the roughly 30,000 businesses that relied on professionals such as salespeople, realtors and bankers for half of the garments getting dry cleaned before the pandemic.
One in six dry cleaners have closed or gone bankrupt in the U.S. already, and many won’t survive without more stimulus, according to the National Cleaners Association. Nationwide, the industry is likely booking only half the $7 billion in revenue it did pre-Covid-19, according to the NCA. More than 90% of owners aren’t taking a paycheck, and about half are paying employees out of their savings.
“It’s an ugly, ugly time,” said Nora Nealis, executive director at the trade group, which has more than 2,000 members. “Most of them are holding on with their fingernails in hope of help.”
The slump is particularly tough on Asian American entrepreneurs, as they own at least 40% of dry-cleaning businesses, according to NCA estimates. Concentration of Asian American workers in industries such as hospitality, retail and laundry service partly explained the disproportionately high level of job losses among them during the pandemic, according to research by Donald Mar of San Francisco State University and Paul Ong of University of California at Los Angeles.
Overall, the number of Asian American business owners was down 17% in September compared with February, according to data compiled by University of California at Santa Cruz economics professor Robert Fairlie. That was the worse among all races in the country.
After 30 years of operating in Manhattan, Exquisite Cleaners closed its doors — unable to survive the pandemic. Photographer: Gabby Jones/Bloomberg
Lee, who was born in South Korea and grew up in Argentina before immigrating to the U.S., entered the dry-cleaning business in 1985 by buying a store from his brother-in-law. Before that, he was a truck driver, delivering produces overnight.
He credits a $500,000 Paycheck Protection Program government relief loan and rent concessions from most of his landlords for his survival so far this year. Over the summer, some stores could make as little as $200 each day in sales, with essential workers like police officers, doormen and health-care staff as only customers, he said.
This winter will be tough, Lee said. He worries more people will get used to working from home and doing Zoom calls.