The summer slump: Businesses find ways to combat loss of students during summer

Businesses+in+Ames%2C+especially+those+in+Campustown%2C%C2%A0suffer+during+the+summer+months+when+students+are+gone.+Owners+are+forced+to+come+up+with+ways+to+combat+the+loss+in+sales.

Photo Illustration: Kelby Wingert/Iowa State Daily

Businesses in Ames, especially those in Campustown, suffer during the summer months when students are gone. Owners are forced to come up with ways to combat the loss in sales.

Max Dible

The summer months serve as a hiatus for ISU students who are granted a reprieve from the demands of collegiate life — but for many Campustown businesses, the prospect of the summer break is not as inviting.

T.J. Rakitan, a graduate assistant and adviser in the ISU department of economics, said the easiest way to explain the economic changes that occur during the summer is through the concept of supply and demand.

“If you think about the demand [for products], there should be less, so that is going to drop the equilibrium quantity,” Rakitan said. “Students have more free time on their hands, so they may go out to eat more and go out drinking more, but there are fewer of them.”

The quantity of a good or service demanded by the public affects the quantity of that good or service produced and sold by businesses — hence, a decrease in sales volume creates a slower economy.

Ravinder Singh, who owns both AJ’s Market & Liquor and AJ’s Ultra Lounge in Campustown, provided some of his sales numbers, which support the notion proposed by Rakitan.

Singh said that sales at his Campustown liquor store location plummet nearly 70 percent during the summer compared to when students occupy Ames in full force.

Singh owns a second liquor store in west Ames, where he said sales also drop significantly during the same time period but by a slightly smaller margin of 50 percent.

He speculated this difference may be due in part to the location and subsequent customer demographics — during the school year, the Campustown location does around 20 percent more business than the west Ames store.

It is not only the liquor and bar businesses that suffer when students exit Ames, however.

Matthew Goodman owns and operates four businesses in Campustown, including the Fighting Burrito, Battle’s Barbecue and two late-night food stands, Super Dog and Smiles & Gryos.

Goodman said his food-service businesses tend to see a steep drop off once the spring semester ends.

“For [Fighting] Burrito, sales probably go down at least 30 percent,” Goodman said. “The gyro stand and Super Dog probably go down 50 percent or more.”

Goodman went on to say that the reason behind the free-falling summer sales numbers is fairly clear.

“It depends on the demographic proportionate to students,” Goodman said. “[Fighting] Burrito and the mini-carts are late night — and late night is predominantly students. [Fighting] Burrito delivery is still a young demographic, where pizza delivery is an older demographic. Families and kids and everyone order pizza, but [Fighting] Burrito tends to be more of an independent, young adult demographic.”

The adjustments made in Campustown to combat the general economic downturn during the summer vary from business to business.

“I usually work full-time in the summer to cut costs down and my family works with me,” Singh said. “When employees with experience who get paid more leave, I hire new people who get paid less and that helps a little bit.”

Goodman said that the migratory flow of ISU students during the summer, along with the desire for vacations, allows him to keep employee hours down through a natural transition that helps him to control costs without firing employees.

“I try to be conservative with how I spend my money and understand there are going to be less profits in the summer, and I adjust accordingly,” Goodman said. “We decrease hours [of operation] if we have to, but we try to avoid that.”

Goodman also said that promotions like kids eating for free at Fighting Burrito are strategies he uses to try and hook into the year-round demographics, bringing more families to Campustown to eat at his restaurants.

These strategies are something Goodman said helps to stabilize sales numbers, as brand recognition in the Ames community is the most effective combatant of the summer outflow of students.

“Battle’s Barbecue’s numbers stay almost flat, or go up even,” Goodman said. “It has been around since the pre-1990s and a lot of those customers are permanent residents. Barbecue is a summer food in general and many residents think Campustown is easier to navigate in the summer.”

Battle’s is not the only business in Campustown that bucks the trend of severe economic downturn in the summer months because of brand recognition.

Brenda Freeman, the manager for Jeff’s Pizza Shop, said there is some drop off in sales but that mostly the clientele and the hours of heavy business in Jeff’s Pizza Shop simply shift when students disperse in May.

“I think this business happens to be established enough that we do not have to worry too much about it,” Freeman said. “Weekend slice nights are always slower, but for lunch we see more of the university staff coming over. We see more business owners and business people come in for lunch too, so it kind of balances out.”

Singh said his Ultra Lounge also experiences a mild drop off of around 20 percent, but that by keeping it closed on weekdays he adds a bit of allure to the bar, which helps to fill it to capacity on the weekend nights and maintains the Ultra Lounge as a viable business.

The dip in the amount of product bought and sold across all of Ames businesses does not only have an effect on the businesses themselves but also on the work force, including the student work force.

“There are more students looking for jobs, but not as many units [of product] being traded,” Rakitan said. “What that can lead to is people not finding full employment. They are willing to work more time at the same wage, but the work is not available.”

Campustown is not alone in the struggle to maintain profit margins during the summer. Ben Conway, the store director at the West Hy-Vee, explained why businesses throughout Ames — large and small — need to prepared.

“When you no longer have 30,000 students [around], whether you are a Hy-Vee store or a small restaurant, you are going to feel the effects of that and you have to adjust accordingly,” Conway said. “You have to know your business well and be able to control your expense structure because, for the most part, the volume dictates how you run your business.”