With another lockdown coming, businesses fear ‘ruin’

Gyms, cafe chains and theaters are worst hit due to COVID-19 * toy stores, food stores and wine shops profit as Israelis buy ahead of lockdown.

By HAGAY HACOHEN
Israelis, wearing face masks for fear of the coronavirus, shop for grocery at the Mahane Yehuda market in Jerusalem on July 14, 2020. Israel has seen a spike of new COVID-19 cases bringing the authorities to reimpose restrictions to halt the spread of the virus (photo credit: OLIVIER FITOUSSI/FLASH90)
Israelis, wearing face masks for fear of the coronavirus, shop for grocery at the Mahane Yehuda market in Jerusalem on July 14, 2020. Israel has seen a spike of new COVID-19 cases bringing the authorities to reimpose restrictions to halt the spread of the virus
(photo credit: OLIVIER FITOUSSI/FLASH90)
The government’s planned three-week lockdown set to begin on Friday threatens to hurt most businesses, but some will be hit harder than others. Essential services such as food stores and pharmacies will remain open as Israelis are expected to buy large amounts of food for the upcoming holiday meals and to prepare for the many hours spent at home, often with young children asked to study facing the computer screen. Pharmacies and cosmetic stores are actually expanding, with toy stores reporting an increase in sales.
“If offered compensation, I will be a ‘Good Boy’ and close the gym,” a gym owner at Nof HaGalil told N12 on Sunday evening. The implicit warning is that, without money in hand, business owners may refuse to close their doors.
A hundred restaurants already declared they won’t comply with the demand and several gyms reported the same. They all have three things in common: a fear that the government will not be willing or able to offer them compensation; the real danger of not being able to stay afloat; and being relatively small.
Prime Minister Benjamin Netanyahu addressed the issue of compensation on Sunday evening, telling the nation that he asked Finance Minister Israel Katz to present an “aid plan” to support businesses on Thursday, less than a day before the lockdown is meant to be enforced.
“We were the first to close and we still didn’t open,” a source in the Israeli movie industry told The Jerusalem Post. “3,000 movie theater workers are sitting at home and we didn’t get any compensation until now.” This comes from a sector that has lost 100% of its earnings since the COVID-19 pandemic started.
“In other countries people are removing restrictions,” the source said. “Here, we impose more.”
Those who have a strong back, such as large fitness center chains, are keeping quiet about any plans to defy health regulations – because they can afford to do so. Small businesses, according to a local gym owner in Gedera, “are facing ruin.”
This means that small, privately owned businesses that stand to lose the most will also have the greatest motivation to remain open despite the health risk. For example, a self-employed barber might accept clients at his home and work under the table to avoid losing his livelihood.
Some 45,000 businesses are expected to close by the end of 2021, 5,000 of them because of the upcoming lockdown, The Marker reported on Sunday citing Dun & Bradstreet. It will cost up to NIS 800 million for restaurants, and NIS 5 billion to non-food sectors such as fashion, the report claimed, citing Czamanski & Ben Shahar.
This means that hundreds of thousands of people will become unemployed, since Israeli law doesn’t currently recognize COVID-19 as an “act of God” that can grant people debt relief or a path to skip paying rent. When Israelis go shopping in a mall in December, the malls they visit will have more chains and far less family-owned stores. Movies and coffee houses might be entirely gone.
“People don’t understand how the food business works,” Café Café owner Ronen Nimni told N12 on Sunday evening, “you have to pay suppliers; people won’t be willing to grant you extended periods of grace over and over again.”
He’s right. Not only does this lockdown come without a deadline, nobody can vouch that it will be the last of its kind. The entire world is waiting for a COVID-19 vaccine, and even should one become available, it would take time to distribute it among the general population.  
However, for the owner of The Grapes Man wine stores Haim Gan, business is good. Israelis buy large amounts of wine ahead of the holidays, and maybe a few more bottles for the long days ahead.
“We don’t see a drop in wine consumption despite restaurants closing down,” he told the Post. “This means the public is drinking better wines now, as they spend what they would have spent at a fine restaurant on wines delivered to their homes.”
Gan, the owner of the oldest and largest wine education center in the country, said that the summer had been a very hot one, so Israeli white and rosé wines are now sold out.
“People aren’t able to travel outside the country now so they spend the money here,” he said. “It’s also likely people indulge more as they view themselves as deserving a little break with all the lockdowns and hardships.”
While everybody is calling on the state to offer aid, nobody mentions that an economy with a high degree of unemployment and financial instability isn’t known for spending. Without spending, the state loses tax revenues. Katz could offer the best plan in the world on Thursday, but with Israel already carrying the biggest deficit in its history, nobody is sure where the money will come from.