How we now long for the good old days of summer 2007.With gas zooming past $4 a gallon, Kansas City drivers, accustomed to leisurely, long drives anywhere across our relatively vast metro area, have begun putting on the brakes. They’re thinking twice before getting behind the wheel, and when they do, they’re generally staying closer to home.

That translates to bad news for Kansas City retailers. But it’s not just retailers who are hurting. Every business, service provider, entertainment venue, employer, educator and manufacturer in the region is suffering in ways usually obvious, sometimes surprising. And many small businesses feel the pain coming and going. They’re getting hit with higher costs on almost every good and service that comes in the door; then they have to struggle constantly with the question: How much can I pass along to my customers before they go somewhere else?

Despite the constant drone of negative news and dire predictions, Kansas City businesses-harkening back to our roll-up-our-sleeves roots-are facing all this doom and gloom head-on. We don’t have to like it, but we are Midwesterners, we are Kansas Citians. That generally makes us a little more practical and a little more willing to do whatever it takes to solve
our problems.

“It’s just the reality. And you’ve got to face reality and deal with it and be productive and provide the services to your customers that they expect,” said Parker Young, Vice President of Operations for Straub Construction. For anyone in the construction industry, already hammered by the soft housingmarket, fuel costs are only one ingredient in a very expensive stew.

“Oil prices are affecting all of us in the construction industry,” he said. “All the products have some form of petroleum or oil in them–shingles, plastic piping, vinyl windows, asphalt, steel and copper. All the prices are going up. In the asphalt market, the suppliers can’t lock their prices in longer than 30 days. So when we’re putting together a bid for a project we hope to start a year from now, it makes it very difficult to accurately predict our costs.”

The story is similar for Ted Ferrel, president of Ted’s Trash Service in Independence. The skyrocketing cost of fueling his
fleet is only the beginning. “All our costs are going up, including hydraulic oils, steel, truck components. We use a lot of steel to recondition containers, and anything that has to do with steel, including brake drums, front-end components, has increased. We need to replace brake drums every three to four months and we have six brakes on each truck. Steel has jumped from $65 to $115 in just a matter of weeks.”

Small Business, Big Problems
Soaring fuel prices are hitting small retailers especially hard. “Fuel prices are killing me,” said Debbie Fulton, owner of Gladstone Flowers, whose lifeblood, like most floral shops, is deliveries. “Two years ago gas was running about $280 a
month. Now it’s between $700 and $800. And flower deliveries from South America have nearly doubled in a short time.” Her expenses have nearly tripled. It simply isn’t possible for her to pass along all those costs to her customers and expect to keep her doors open. Flowers are typically a gift or luxury for most consumers.

“People just aren’t buying flowers like they used to, they’re spending most of their money on gas.” Still, Fulton maintains a sense of humor. “My delivery person is really going to start complaining when she has to start using her bicycle to make deliveries.”

Brian Stevens, a Jason’s Deli franchisee, has a similar story. “One of our primary revenues is catering, and all companies are looking to find ways to save money, which means they are cutting back on luxuries, one of whichis catering food to employees, so we have seen a drop in our catering sales in the last year.”

Like most restaurants, Jason’s Deli has absorbed price increases across the board. “High fuel costs increases harvesting
and transporting food, so they are hitting us with those increases in order to make up the difference.” A table tent in the restaurant touts ways that Jason’s Deli is going green. Some of those, naturally, can also be considered creative ways to lessen the pain of fuel-charged increases in expenses. “We have replaced much of our traveling with conference calls
and webinars.”

Entertainment venues typically suffer when the economy is sluggish. Brandon Staley, Public Relations manager at Worlds of Fun, says that “in times of poor economic conditions, amusement parks can sometimes be an nomaly-while the park loses some of its long-distance visitors, it gains local residents who are skipping long-distance trips this summer. Still, the park is offering plenty of incentives, including a discounted “Gold Pass,” a fullseason pass that includes admission to both Worlds of Fun and Oceans of Fun, parking and discounts inside the park, all for $109.

Even the people who make their living selling that $4-a-gallon gas are suffering. Really! Tim O’Shea is with Pour Boy Oil
Co., which operates eight convenience stores mostly in the Northland. “Most gas retailers only make two or three cents a gallon on fuel sales, which doesn’t allow for much profit,” he said. And much of that is eaten up by credit card fees, which are based on a percentage of sales.

“Most stores use gas sales to get customers through the door into the store where the betterprofit margins are. But the higher the price goes on gas, the less money customers have to spend inside. Instead of buying a case of beer, they’re
buying a six-pack. Instead of a carton of cigarettes, they’re buying a pack or two.

Some small business owners are getting hit from a third side: employee attrition. Commuting costs hit parttime, low-wage earners especially hard. It wasn’t too big a deal a few years ago for a $10-an-hour worker to commute 30 minutes to a job at a convenience store, the mall, or a call center. But providers of lower wage jobs now openly worry that as the crisis lingers on, they’re going to have trouble keeping those jobs filled.

“We have so many workers from northwest Missouri counties like Buchanan and Clinton,” said John Miller of Saint Luke’s Hospital Northland. “What’s it going to mean to employees when fuel is such an obstacle” getting to work?

Worlds of Fun does what it can to help its employees. “We recommend our employees car pool and we have a bus stop right next to our property. Also, we offer gas cards as gifts or certain performance incentives.” WOF even offers rent assistance to some employees who get an apartment close to the park.

«June 2008 Edition