Three businesses on the Drag closed their doors over the summer and have relocated their businesses to more lucrative areas. TerraBurger, Wish Boutique and Storyville have all been forced to shut down their campus locations because of the bad business climate in the area, including the high rent, fluctuating number of customers and lack of parking.
Over the years, the Drag has had a notorious revolving-door effect on businesses, with many of them popping up to capitalize on the large student population but then quickly closing. One of the more noticeable testaments to this is Intellectual Property’s brightly painted vacant building sitting at 24th and Guadalupe streets. What has now become a usual location for loiterers was previously leased to the bookstore, Tower Records and Varsity Theater at different times.
“The price [of rent] was beginning to get five figures,” said Michael Ludlow, general manager of TerraBurger, which closed May 31. “Usually you want rent to be 8 to 10 percent of sales, and we were looking at 25 percent. Apparently it’s kind of the way they do things. It was lower when we first got there, but then they quickly bumped it up. If they reduced the rents across the board it would boost the economy [around campus], then it would give small businesses a chance to survive.”
Summer can also be a particularly difficult time for businesses near campus because of the significant drop in customers, with establishments such as Dobie Mall’s convenience store simply closing whenever doing so seems more economical. In addition to local established businesses, many of the food stands located in the lot at Rio Grande Street and MLK Boulevard have moved to other locations with heavier traffic. But, it’s not just food stands that have to worry about the lack of customers.
“[The owners of Storyville] liked the whole ‘next to college’ idea, but it just never picked up.” Storyville manager Sandy Myers said. “There was never really a time when it was busy. Basically they’ve been there for two years and sales just weren’t ideal, so they wanted to switch locations over to where there was more foot traffic.”
Myers added that the area had not been well traversed during the school year, so the idea to relocate the store to South Congress was considered months before it moved May 6.
However, some stores don’t get out before it’s too late. Wish Boutique also closed this summer when its employees were locked out of the store in early July, with a large cable lock wrapped around the doors, a sign notifying them of overdue rent and dresses still hanging on the racks. The leasing company now selling the property refused to comment on the details of the situation. Wish’s Houston location is still open for business.
Another popular theory about the cause of the high turnover rate focuses on the lack of free, available parking. Wish’s Houston location in the eclectic Montrose district has free parking available in front of the store in addition to free parking in residential areas located behind the building.
“People who have the potential to become part of a consistent customer base do not want the hassle of trying to park, so they go elsewhere,” marketing professor Wayne Hoyer said in the Jan. 29 issue of The Daily Texan.
Still, others feel that store closure has nothing to do with the allegedly poor business conditions on the Drag. Survival or failure, they believe, relies on a business’ price points.
“One of the reasons I think [TerraBurger’s location] had a high turnover is the price of the food,” said Fida Shah, owner of Arpeggio Grill, which will open its second location in the space TerraBurger and Stixs Bistro used to occupy before the start of the fall semester. “I asked the owner of TerraBurger, if he could come back, what he would do differently? And he said the price. The key idea is to have a good price that will fit the students’ budget.”
While there isn’t necessarily one stake in the heart that kills businesses on the Drag, both TerraBurger and Storyville are using their new locations to expand and change their operations. Myers reported more active sales and plans to produce new designs more quickly at Storyville’s South Congress location, and Ludlow has plans to add an indoor dining room by using a repurposed dining car on Research Boulevard.