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Struggling economy affects River Falls, area businesses

February 26, 2009

Like a wounded beast, the U.S. economy is struggling to survive, and local businesses are feeling its death pains.

Game Quest, a local video game store and Hotspot Coffee both reported a drop in sales.

“It’s definitely hurt. Video games aren’t high on the priority list when you can’t buy food,” Game Quest store manager Bryan Wallace said.

Though some local businesses are struggling, McDonald’s sales are up.  Elizabeth VanSomeren, general manager of the River Falls McDonald’s, said her family can be used as an example for a steady increase in sales.

“As a family of five it’s harder for us to go to a Perkins or a nicer restaurant. People want to go out that can’t afford it and McDonald’s offers a more reasonable option,” VanSomeren said.

Sales have increased at McDonald’s but the fast food giant does have its own share of problems.

“Corporate has put us on a hiring freeze because of the economy. Food costs change month to month. I noticed the price of cheese and lettuce increased 17 percent from January to February,” VanSomeren said.

U.S. total business sales in November were down 5.1 percent and 3.2 percent in December, according to the United States Census Bureau Web site.

“In January, job losses were large and widespread across nearly all major industry sectors,” according to data reported by the U.S. Bureau of Labor Statistics.

Measures are being taken by local businesses to survive the economic recession.

Latashia West, owner of Hotspot Coffee on Main Street, said she promotes events and gives discounts on coffee. UW-River Falls students receive a 15 percent discount on anything in the shop when they present their University identification card.

Mcdonald’s began a big push on specialty coffee with its McCafe and VanSomeren said that every Mcdonald’s should have a McCafe by summer.

Wallace was not so optimistic.

“It’s tough to do advertising. It’s expensive for a small town business,” he said.

Wallace said the store’s location near ShopKo on the outskirts of town makes it even more difficult to do business because local people don’t know about the store.

West said when she opened Hot Spot Coffee almost two years ago she decided not to serve alcohol in the shop.

“I want to provide a family friendly atmosphere,” West said.

But with a coffee shop moving in two doors down, serving beer and alcohol, and the economy the way it is, the original business plan may change in the future, she said.

McDonald’s and Hot Spot reported they noticed a shift in sales beginning in November or December.  Wallace said that Game Quest sales began to slip as they normally do in the summer when college students leave, but stayed abnormally low when students returned in the fall.

Wallace offered his opinion on how local businesses can improve sales.

“Find a niche,” he said. “If you’re the only one selling something it’s easier to do business.”