DAPHNE, Ala.—Business in Daphne—much like that nationwide—is not exactly booming.

Motorists traveling “Hamburger Hill” on U.S. Highway 98 daily see the sad state of affairs from shuttered Checkers and Krystal franchises. (The latter even boarded up its windows and doors.) They join long-vacant buildings on the strip that once housed a restaurant and a gas station and Jubilee Square Shopping Center closures that have included Goody’s, Boater’s World and Child of Mine.

By June’s end, Bay Coffee Company on Main Street was the latest casualty.

Recession claims coffee sales

When Amy Love took over Bay Coffee on Dec. 1, 2007, she dreamed of being her own boss. The former accountant was familiar with the industry—her first husband managed a Waffle House franchise; “I’ve been around food and beverage all my life,” she said—and her goal was to “make a little money … not much.”

Though expectations were modest, they proved unrealistic amid an economic recession.

“I had payroll,” she said, citing one unavoidable, contributing factor to her business’ decline. Paying a combined 40 hours’ worth of part-time workers’ wages was necessary during the first year, when Love had heavy admistrative work, she said.

“I was paying minimum wage and when minimum wage went up I had to go up on my prices,” Love said. “That and the payroll taxes ate up all my profit.”

Her first year on the job also had longer—often fruitless—hours.

“When I took over it was 7 (a.m.) to 7 (p.m.),” she said, referring to the first year’s Monday-through-Saturday schedule; she later switched to a Monday-through-Friday schedule. The move was necessary due to unsatisfactory sales, she said, “because from 8 to 2 on Saturdays I had two or three Saturdays that were like $45 in sales. I was like, no more, Saturday’s closed. I’m tired anyway.”

Love, 44, later made Bay Coffee a one-woman operation and cut back service hours, closing shop at 3:30 p.m.

“This year, I’m showing a profit: about $1,200 a month,” she said in early June, prior to Bay Coffee’s closure. “The problem I’ve got is this year, having to pay for my mistakes from last year. So it’s not helping me from an income side. Very soon, it would.”

Love’s forecast was never realized due to a number of stumbling blocks, most of which correlated with the ailing economy.

First, the coffee shop took big hits last November and December.

“When all the stocks and everything else fell, I heard the news commentators giving advice on use of your money: Stop going to Starbucks; drink coffee at home,” she recalled. “I was like, ‘Gee, thank you. I’m not Starbucks but you just told my clients to save a couple of dollars. … if half my customers start doing that, my coffee sales are gonna die—and they did.”

Coffee accounted for about 35 percent of sales, she said, lamenting the profit loss. “You have a higher gross profit in beverages: It doesn’t cost much to make a gallon of tea,” she said. “It doesn’t cost much in serving a gallon of tea; you make a higher profit than you do serving eight soft drinks.”

November through February were “absolutely brutal” months, Love said, adding that the downturn made her unable to pay about two-and-a-half months’ rent on the Olde Towne Daphne building that housed the shop.

After catching up on payments, she vowed to never again leave her landlord empty-handed.

“As soon as you get a month that you can’t pay full rent … you’re closing the doors at the end of that month,” Love said, recalling her decision. “If you can’t pay your landlord—who’s been very good to you—in a timely fashion, then, it’s time.”

The death knell came in May, when Love’s son broke his hand, forcing her to leave work and tend to him.

“The week before Memorial Day I was only open one-and-a-half days; I easily lost $700 that week in sales but your family comes first,” she said. “I can’t rebound that with a holiday week following it, because there’s a lot of people out of town.”

Bay Coffee Company closed June 26; a source close to the shop said the space will re-open as a bakery.

Looking back, Love said if she had it to do over, there are some things she’d change.

“I took over probably a month too soon; I would have given myself more time to get established,” she said. “If I had that extra month … it would not have been so stressful to be trying to do everything (start-up paperwork) in the first quarter that needed to be done.

She added that, early on, she would have ramped up advertising and marketing efforts. 

Still, Love—who plans to return to the corporate world—viewed Bay Coffee as a success, particularly in the second year when her net profit increased after going solo.

“I did double my sales from the previous owners. I changed my hours and I changed my days. I did well,” Love said. “It’s just the bad times make it look like I did not so well.

“I gave myself two years to be able to pay myself and the recession cut that time in half.”

Nonprofits

Nonprofits aren’t immune to the effects of a contracting economy.

The Shoulder, a voluntary substance-abuse rehabilitation facility, reported a need for funds as it anticipates an upswing in referrals.

“With the cost of everything going up, the inflation affects us just like it does everyone else, in terms of our day-to-day operations,” Executive Director Philip Drane said. “One of the greatest frustrations that I have, since I’ve been here for 22 years now, is that we’ve had this waiting list of people to get in, and I have committed that we’re not going to accept more people into our treatment program than we can provide the very best of our treatment for.”

That’s unfortunate for Baldwin County residents who could use the help—which is a considerable number, if national trends are an indication. According to a study by the U.S. Department of Health and Human Services’ Substance Abuse and Mental Health Services Administration, nearly 7 million Americans ages 18 to 25 in the past year needed treatment for alcohol or illicit drug use—a consistent statistic since 2002.

With limited capacity—The Shoulder has some 60 beds but daily serves about 37 residents, Assistant Director David Brown said—some addicts must wait for treatment.

“We don’t put more than 10 clients on each counselor, so we’re limited by our staff,” Brown said. “We could grow our counseling staff and utilize those beds, except that we don’t have the money. And that’s always been a problem.” In fact, he said, hopeful clients comprise a waiting list that’s backed up to October—no shock, staffers said, because with hard times return old habits.

“We are always running at full capactity because the need increases as the economy decreases,” Debbie Hanson, a spokesperson, said.

“What happens with people regardless of their addiction—drug, alcohol, eating or shopping—is when situations in life get stressful or seem out of control, the addiction kicks in and seems to be of the greatest impact on the individual,” Drane said. “When people can’t pay their mortgages it (can) cause them to revert to their addiction.”

Treatment at The Shoulder costs approximately $6,000 per patient’s service, which can extend to 18 weeks. Scholarships offset costs for about 90 percent of clients who can’t pay, many who come directly from jail and can’t land a job.

“The nature of the beast is, you do alcohol and drugs long enough, you’re gonna have a charge,” Hanson said, adding that although approximately 30 percent of clients have a rap sheet, the facility accepts no one who’s committed violent crimes.

The Shoulder’s Christian-based, 12-step program is funded by clients who pay a portion of their fees; and corporate, foundation, church and individual donations. The Baldwin County drug court—which adjudicates nonviolent defendants who abuse substances—can give addicts a second chance, providing the option of therapy and rehabilitation in lieu of criminal charges. It funds a portion of its referrals’ client fees, but the aid must be repaid. Often, that means The Shoulder—by way of generous donations—foots the bill.

However, during an economic downturn, donations for the program are down, Hanson said, adding that any funding loss can mean deferrment of one peron’s treatment and an ensuing domino effect on society.

One scenario, she said, may involve a man—call him “John”—who’s lost his job due to a deep-seated drug addiction and who can’t pay for treatment at a commercial center; the problem, unchecked, can lay a financial burden on his family that includes reduced spending on food, clothing and shelter. Non-profit organizations may have to step in with various services to make up the difference.  

“Conversely, if John gets sober, then he has a much better chance of getting a job and resuming his responsibilities, taking a burden off the nonprofits,” Hanson said.

In the scenario, people who’ve never considered taking illegal drugs also are affected.

“The thing that people don’t realize is how the drug and alcohol problems affects them,” Drane said, noting the increase in homeowners and auto insurance premiums that can result from areas of high crime. The Substance Abuse & Mental Health Services Administration has reported links between drug use and violent crime. For instance, from an estimated 1.2 million adults arrested for serious violent or property offenses between 2002 and 2004, 60 percent were reported more than likely to have used an illicit drug, according to a National Survey on Drug Use and Health report. Only about 13 percent of those arrested for minor offenses were as likely to abuse drugs.

For The Shoulder to help, donations are key to expanding operations and supporting clients.

Its facility, situated on Roper Lane near the Lake Forest subdivision, costs approximately $8,500 in monthly rent. “That’s $102,000 a year that we could put into our operating expenses, maybe hire another counselor, maybe increase our case load,” Drane said. 

He hopes operations move into a new, $2 million building that would locate just six acres adjacent to the rented property.

“We had originally planned (on a $4 million building) before the economy tanked,” Brown said. “We have since downsized that building (plan): We’ve got it designed in such a way that we can add additions as the economy improves. We’re gonna get into something that meets our basic minimum needs, and plan our expansion at a later date.”

Assuming, of course, the money is available. The Shoulder has roughly $1 million from selling its property on the Causeway—Hurricane Katrina in 2005 condemned its former headquarters—and that disaster’s insurance benefits; the center also hopes to receive FEMA funds from the storm’s aftermath. But it still needs contributions to make up for the shortfall.

“If we had it in good, solid pledges from businesses from the area, we could go ahead and proceed,” Brown said, adding that the center did have six-figure pledges from local businesses that ultimately pulled out due to their own financial hardships.

Every little bit helps, staffers said.

“If I had one Starbucks coffee worth, say, $10, from every person in Daphne, I would not have a budget problem,” Hanson said. 

The money certainly helps operations like The Shoulder, a standalone operation unlike nonprofit outfits run under umbrellas, Hanson said. 

“If you are Salvation Army—and I love them—they have a parent organization, so if they’re having a hard time locally, then they can kind of borrow from their national affiliate if they have to,” Hanson said. “We don’t have that option.

“I think we need to be supporting our local grassroots nonprofits first; that doesn’t mean don’t support everybody else—but they’re not going to go under.”

Part of the problem—for The Shoulder, anyway—is the difficulty of convincing residents to fund rehabilitation.

“Trying to explain why it’s important to invest in treatment is very difficult,” Hanson said. “People say, ‘I want to give to sweet little children, I don’t wanna give to drunks and drug addicts.’ But (for) the sweet little children who don’t have the shoes they need, their daddy, or their mama, or whoever, probably has a drug problem. There’s a trickle-down effect. 

“There are a lot of things that you can’t fix: there are diseases that are terminal. But with addiction, you get somebody sober, and within a month, they’re a whole different person, they have their lives back. Not everybody stays that way, but we give them the tools; they know that we’re there.”

Despite the challenge of making their services seem attractive, staffers maintained their optimism.

“We’re lookin’ for a miracle, but it’s out there,” Brown said. “We just gotta find it and get it; we gotta sell the public on the idea that we’re helping their community.” 

Ho-ho-hum?

Even Santa Claus is affected by the nation’s crippled economy.

Santa-America—a Daphne-based, national nonprofit service organization—is 300 volunteers strong in its mission of giving love, hope and joy to terminally ill children. Under the program, white-bearded Santa Clauses, aided by “elves,” make year-round visits to children in hospice. The program receives 95 percent of its funding from private donations and fundraising events, said Ernest Berger, founder and president. Its largest foundation donor last year was the National Jewelers Foundation, which gave $35,000. The largest individual donor was Berger’s The Elf Group LLC, which gave $40,000. Local community organizations, such as Rotary International and area Kiwanis clubs; area foundations, such as Cunningham Foundation, Bledsoe Foundation and Moore Foundation; and businesses like Wal-Mart, Sam’s Club, Fish River Christmas Tree Farm, Baldwin Bone and Joint, University of South Alabama College of Medicine and the Mobile County Medical Society and Medical Alliance, also contribute.

“Less than 5 percent of current donations come from government,” including the city of Daphne’s annual $2,500 donation, Berger said.  

Despite the support, he said he’s seen a dramatic decline in donations as the country’s financial slump has forced individuals and corporations to cut costs, including charitable contributions.

“Donations in 2008 ran 50 percent below the prior year while the need for special Santa visits doubled,” Berger said, adding that volunteers’ expenses are reimbursed.

Many volunteers continue their visits to sick children in faith that future donations will pay for today’s visits, Berger said. However, he expects the non-profit sector to take a major hit even as the national economy recovers.

“Santa-America believes that many wonderful, purposeful, free-standing local and regional non-profit organizations will cease to exist as the recession continues to restrict our donations and support,” Berger said.

The organization in 2007 began forming alliances with other non-profits to help fulfill its mission. It earlier this year announced a partnership with the National Autism Society—which expanded Santa visits to autistic children throughout the country.

Santa-America plans to announce a national alliance with the U.S. Army’s Wounded Warriors Program this summer; the partnership will allow volunteers to visit military-service personnel and their families dealing with active duty-related post-traumatic stress.

Eighty percent of proceeds from Santa-America’s share of local fundraisers is used to support its mission with children in that location, whenever possible; about 20 percent of donations is designated to support the organization’s national and international initiatives, Berger said.

Forming such partnerships helps Santa-America expand services and keep the five-year-old outfit afloat, but Berger indicated the organization, even in hard times, was not about to compromise its mission.

“The current recession has actually strengthened our resolve to make sure every child facing medical or emotional challenges has a special, loving and supportive friend in Santa Claus,” he said.

Bright spot

Baldwin County’s public school system earlier this year faced a $23 million deficit that resulted in necessary layoffs of non-tenured teachers; the measure threatened high school fine-arts programs—where many educators lacked dual certification—and will require remaining teachers to take up the slack. Across the bay, the University of South Alabama and the University of Mobile raised tuition by 8 percent and 6 percent, respectively. Spring Hill College raised annual tuition by $1,210 and cut several salaries by 7 percent. But the United States Sports Academy in Daphne, has nothing negative to report, said Thomas P. Rosandich, its president and CEO.

“We have no debt—which is unusual for a private school,” he said.  

The academy “can pay its total operations—personnel, supplies, expenses, capital purchases, etc.—on our tuition only and still have excess revenues as a 501c3 or as a nonprofit,” Rosandich said, adding the school annually posts excess revenues on tuition and fees, despite—or perhaps due to—lower rates. Tuition for its Doctor of Sports Management program—which serves more than 200 students, staffers said—is approximately $35,000, compared to upward of $95,000 at some state-run institutions. The academy also offers Bachelor of Sports Science and Master of Sports Science degrees; the latter serves 800 students, staffers said.

“The academy has historically been among the very few institutions in higher education that is able to fund its operations entirely on the revenue it derives from tuition and fees and specialized educational programs,” Rosandich said. “The academy does not receive operating subsidies from the state—as do the public universities—nor from theological institutions such as churches, as is the case in many private institutions. We basically do it all ourselves.”

Operations extend beyond national borders, with continuing education and certificate programs offered in 65 countries. In fact, Rosandich said recently, “we signed two major new contracts in India and China.”

“The key is our technology; we can teach online,” he said, referring to what many at the academy call a “university without walls.” The primarily Web-based curriculum has offered cyber courses for 15 years, long before many colleges jumped aboard the online bandwagon.

In addition to the academy’s vast reach, the economic situation could present gains for the school, staffers said.

“Typically during a recession, people who are out of work will go back to school to prove their marketability,” Rosandich said, adding the academy’s online enrollments are ahead of projections.

The national unemployment rate in June was 9.5 percent, according to figures released last week.

Despite a Reuters report that said June unemployment reached a record high since August 1983, Vice President Joe Biden in an interview on ABC’s “This Week” Sunday said it’s “premature” to determine whether a second stimulus package is needed. President Barack Obama within his first month of office pushed through a $787 billion stimulus package that aimed to create 3 and 1/2 million jobs, improve infrastructure and boost consumer spending.

“We misread how bad the economy was, but we are now only about 120 days into the recovery package,” Biden said. “The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having distributed the bulk of the money.”

“The second question becomes, did the economic package we put in place, including the Recovery Act, is it the right package given the circumstances we’re in?

“And we believe it is the right package given the circumstances we're in.”

Staff Writer Sasha Heller contributed to this report.