Twin Cities Business https://tcbmag.com Minnesota's Leading Provider of Business News, Insight and More - Twin Cities Business Sat, 20 Jun 2020 03:34:56 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.4 https://tcbmag.com/wp-content/uploads/2020/04/favicon.png Twin Cities Business https://tcbmag.com 32 32 Co-working Isn’t Dead Yet https://tcbmag.com/co-working-isnt-dead-yet/ https://tcbmag.com/co-working-isnt-dead-yet/#respond Fri, 19 Jun 2020 20:03:25 +0000 https://tcbmag.com/?p=33703 Working from home may be losing its appeal after a few months of remote operations, which is something co-working spaces are banking on as the pandemic continues. Many local operations including Industrious, Modernwell, The Coven, and WeWork have begun phased reopenings to more members. Some spaces like Life Time Work have remained open for members in fields considered essential.

To prepare for reopening, the furniture is getting rearranged, the sanitizer is set out, and co-working leaders are innovating new ways to make people feel safe and comfortable in their spaces again.

After closing its doors in March, The Coven opened up a virtual membership, gaining 500 virtual members and hosting over 100 online events within the past few months, said cofounder Alex West Steinman.

“What we’re really interested in doing is creating physical and psychological safety, which means that workspace design is No. 1 in this. How do you create a space where people feel seen, validated, and heard, and also safe, clean and healthy?” she said. “We want to be really thoughtful and measured in our approach at reopening.”

June 8 saw the reopening of The Coven’s St. Paul location at 25 percent capacity, which allowed The Coven to test out new physical distancing measures and precautions. The plan is to open both the Minneapolis and St. Paul locations at 50 percent capacity on June 22. And of course, they’ll need to make some adjustments.

“People will pre-register when they come into our space and reserve a specific spot that they can have for the day to minimize the rotating nature of our desks and our seats,” Steinman said.

The Coven is also using lights on desks that members can indicate whether or not they are open to being bothered by setting it to green or red.

“There’s a lot that we’re putting into this and that we’re learning, working directly with state officials, as well as working as a community of co-working spaces,” she said. “We are imagining a new experience for the physical space and prioritizing the connectivity that people have made virtually.”

While most of The Coven’s annual memberships are renewed and paid in the first quarter of the year, members are being offered extra months on the backend of their memberships to compensate for the time the physical space has been closed. But many of the members have said they’ll just keep their membership as is, which Steinman said is quite helpful.

“Our monthly members have been put on hold for every month that we’ve been closed, and we anticipate most of them coming back,” she said. “We have not seen a steep drop off in numbers.”

When The Coven announced its reopening plans, the response from its members was largely positive.

“For co-working spaces, what it comes down to is being really transparent about what you’re doing, how you’re supporting folks, what you need members to do, and how you want to get feedback from them,” Steinman said.

Some other co-working spaces are not as focused on shared spaces, which simplifies the phased reopenings. Life Time Work is set up with 75 percent of its space already being dedicated, with the remaining 25 percent being shared. In those shared spaces, half of the task seating has been removed to help people maintain physical distance, said James O’Reilly, president of Life Time Work.

“We won’t be forcing people to stay in one area. I think we will staff appropriately and help direct people to work in a safe manner,” O’Reilly said. “What we have been observing so far from the people who’ve opted in is that people are taking this thing very seriously and they are practicing extreme caution in the workspace.”

The safety protocols will remain until a vaccine is available, he said, although he thinks there will be a stabilization of co-working over the summer, with some normalization in the fall.

“Co-working as a whole expanded very aggressively prior to this slow down. And I think most of it has been focused in areas like dense urban centers. Those urban centers’ office space options––not just co-working space–– are going to see a drop, and that’s just because people will be more efficient with their consumption of office space,” O’Reilly said.

Going forward, he thinks there will be a greater demand for co-working locations closer to where people live, because he doesn’t see people being satisfied working from home on a long-term basis. While wearing pajama pants and working from the sofa may have been novel for the first few works of working from home, people crave the structure of a professional environment.

“I think they will want a formal office space to go to,” O’Reilly said.

He also sees new office construction slowing down, and the excess being absorbed over the next several years as well. Pre-pandemic, Life Time was in the process of developing a co-working space in downtown Minneapolis, but the company plans to lay off 301 employees, primarily impacting its real estate, construction, and architecture departments.

“My true sense is that people will in time get comfortable and look forward to having that sense of community and that sense of connection to others,” O’Reilly said. “It won’t be immediate. The next couple of years I think are going to be very difficult for most co-working operators, particularly those who over-expanded in dense urban centers, and for whom growth was the number one priority. I think a sustainable business that focuses on just fundamentals, as opposed to purely growth is probably a more long-term viable solution.”

Of course, there will likely be some rough times ahead. Co-working operator The Riveter, for instance, is shutting down all of its operations, including its newly opened location in Minneapolis.

“Even as states begin the untested process of reopening, we—like many other businesses—understand that to protect the health of our communities and colleagues we cannot resume regular operations. With no roadmap for the safe return to shared workspaces or in-person gatherings, our co-working business does not have a path forward,” founder and CEO Amy Nelson wrote in a message to members.

The closures are effective June 30.

ModernWell, meanwhile, plans to gradually reopen with thorough sanitization, limited capacity, and distancing measures. But the company’s revenue has been negatively impacted by the pandemic, said Julie Burton, founder and CEO of ModernWell.

“We’ve definitely taken a hit,” she said. “We’ve taken a hit membership-wise, and we’ve taken a hit revenue-wise with our events and workshops. I definitely feel like we are working day and night trying to weather the storm and figure out how we can get through this and how we can keep our members engaged.”

Executing on membership freezes, the organization has been working with members on a case-by-case basis to navigate the situation.

“I’m very, very hopeful, because I absolutely love this ModernWell community and the people. Our members are incredible human beings that work hard and have really meaningful, inspirational businesses, and are very loyal and dedicated to ModernWell,” Burton said. “I’m also realistically aware and mindful of the fact that people are experiencing really difficult times right now. And membership dues are hard.”

While it’s a difficult situation for co-working spaces, Burton remains optimistic for survival of the co-working community in the Twin Cities.

“Anybody who knows me knows that I’m a fighter, and that I really care so deeply for this community and for every single member,” she said. “I’m going to fight for all of us to have a place to come back to when we get through this. So, I’m hopeful. I remain hopeful for our business and for all the co-working spaces.”

One of the larger nationwide co-working chains in town, Industrious, is confident in its position, according to area manager Courtney Shomaker.

“Long before the pandemic we had shifted almost entirely to management agreements. Obviously this offers significantly greater flexibility for both tenants and landlords, with substantially less risk,” she said.

The company hasn’t particularly experienced a drop in membership, she noted.

“We’ve seen our enterprise pipeline double and even triple over the last two months, which really just goes to show where our industry is heading,” Shomaker said. “And I think as a result we’re really well-positioned for growth.”

And while co-working will not be going away, it will just look different post-Covid-19, like many other industries, said Brent Robertson, managing director at the Twin Cities office of JLL, a commercial real estate services firm.

Still, if the pandemic lasts into next year, he predicts that a significant number of co-working places will go under.

“But that doesn’t mean they’re going to go out of business completely,” Robertson said. “Owners are going to say ‘I can do this myself, and I then don’t have to sacrifice the direct relationships with the tenants and own it.’ At JLL we’re actually helping a number of owners around the country do that.”

It’s the difference between an ownership and management model, he said.

“The management model simply takes a fee to do the work as opposed to taking ownership and signing a long-term lease,” Robertson said.

Moving forward, he sees co-working filling a niche that’s not going anywhere, even in a post-pandemic world. There will be redesign and an emphasis on de-densification for flexibility if another pandemic occurs.

“Co-working has been around for decades. And it’s historically struggled with rent arbitration dynamic and economic downturns,” he said. “Short term, they’re going to have to figure out how to provide a working environment in a socially distanced manner, which is difficult the way they’re laid out. Long term, co-working is not going to go away completely, and once we get a vaccine, I think we’re going to see it go back to what it was pre-Covid. But in interim, it’s going to be difficult.”

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Lake Street Recovery Fund Tops $6M, Starts Taking Applications https://tcbmag.com/lake-street-recovery-fund-tops-6m-starts-taking-applications/ https://tcbmag.com/lake-street-recovery-fund-tops-6m-starts-taking-applications/#respond Thu, 18 Jun 2020 21:16:42 +0000 https://tcbmag.com/?p=33685 In the wake of damage to many Lake Street businesses after the death of George Floyd, the nonprofit Lake Street Council had an idea to set up a fund to help affected business owners. In just a matter of weeks, the response has been overwhelming.

The We Love Lake Street Recovery Fund has now raised more than $6.2 million from more than 62,000 individual donors and nearly 30 companies and organizations.

The Lake Street Council has now opened up applications for its first round of grants, backed by $3 million from the fund. Business owners can apply for grants of up to $25,000 from the fund. The Lake Street Council expects that the average grant will be about $10,000. That would translate into approximately 300 grants in the initial round. Many of the affected business are owned by people of color.

“These first grants are an initial rapid-response investment to help our Lake Street businesses begin addressing the damage they experienced during the events of late May and early June, and determine how they’ll move forward,” said Jackie Knight, Lake Street Council’s board chair, in a statement.

Rudy Trujillo, owner of Trujillo Tax Service on Lake Street, joined the Lake Street Council board about a month ago. When the fund started, he said, he was expecting that maybe it could raise $200,000 or $300,000.

“We never thought we were going to receive millions of dollars,” said Trujillo. “Nobody at the board of directors expected it to be in the millions.”

The fund continues to accept donations.

Trujillo said he was on the streets during the three worst nights of violence, trying to protect the building that houses his business.

“We got shot at,” said Trujillo. “I saw opportunists looting and burning.”

Trujillo said that the unexpected response to the fundraising effort along with many other people and groups pitching in to help have restored his faith in the Minneapolis community.

A diverse oversight committee of local leaders with strong connections to the Lake Street business community will review the grant applications.

Applicants must:

  • Own or operate a business that sustained building damage
  • Own a business in the broader Lake Street corridor, with boundaries of West River Parkway on the east, 26th Street on the north, the border of Minneapolis and St. Louis Park on the west, and 34th Street on the south.
  • Demonstrate that financial assistance is needed to help reopen their business
  • Operate a business with less than 100 employees and less than $3 million in annual revenue

The applications and additional info can be found on the Lake Street Council website. Applications are available in English, Spanish and Somali.

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Ecolab Elevates Business Cleaning Standards with New Certification Program https://tcbmag.com/ecolab-elevates-business-cleaning-standards-with-new-certification-program/ https://tcbmag.com/ecolab-elevates-business-cleaning-standards-with-new-certification-program/#respond Thu, 18 Jun 2020 18:49:55 +0000 https://tcbmag.com/?p=33628 St. Paul-based Ecolab was a global manufacturer of cleaning and disinfecting products when Covid-19 started to spread across the planet. Now it’s rolling out a science-based cleaning regimen that features “hospital-grade disinfecting products” for all types of businesses.

With the reopening of restaurants, shops and workplaces, businesses are focused on enhanced cleaning procedures that will keep people safe. But they also want to alleviate fears and address valid virus concerns of their employees and customers.

Stepping into that marketplace breach is Ecolab, which Wednesday revealed that it had developed a program that tackles the substantive cleaning needs of businesses. It also helps them convey to the public that they are taking cleaning and sanitizing challenges extremely seriously.

Companies must meet strict criteria to qualify for the “Ecolab Science Certified” designation. In addition to using hospital-quality disinfectants, the companies also will use food-safe cleaning and sanitizing products.

The Ecolab-certified businesses also will employ cleaning, hygiene, and food safety procedures that meet guidelines of local health departments, the Centers for Disease Control, and the U.S. Food and Drug Administration.

Ecolab’s program also requires that businesses have comprehensive staff training, so their employees are correctly applying cleaning products and following disinfecting, sanitizing, and cleaning protocols. Companies that want the Ecolab certification also must undergo an annual comprehensive hygiene and food safety audit to examine whether they are adhering to state and federal requirements, correctly using products, and completing training modules.

“Ecolab is committed to helping our customers rebound and recover as quickly as possible,” said Tim Mulhere, executive vice president and president, Global Institutional & Specialty Services, in a Wednesday statement. “It’s clear that consumers are looking for reassurance that the places where they eat, stay, work, and play are clean and safe. The Ecolab Science Certified Program delivers consumers that confidence and peace of mind.”

The new program is being introduced in North America, and then will expand to other global regions.

“We are afraid of Covid for good reason,” Ecolab CEO Doug Baker said in mid-April during a lengthy interview with TCB. “There is rational and irrational fear.”

Ecolab does business in 170 countries. Baker initially secured the jobs of his employees, and then led efforts to determine how Ecolab could best serve its customers during a pandemic.

“When this hit us, we didn’t have the testing, so all you could do is shelter at home,” Baker said in the TCB interview. “As we go out, I don’t think this is like on Tuesday, you open up the economy again and movie theaters are open and the Wild are playing. It’s just not the way it’s going to work. Even if you did, people wouldn’t be comfortable going there.”

Baker foreshadowed that the economy would reopen in phases, and that consumers and employees would have varying comfort levels about what activities would be safe for them. The new “Ecolab Science Certified” program is designed to address the substance of cleaning and safety procedures. However, companies that earn the science-based seal of approval also can use the designation to increase the sense of security of their customers.

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Minnesota Unemployment Rate Hits 9.9 Percent https://tcbmag.com/minnesota-unemployment-rate-hits-9-9-percent/ https://tcbmag.com/minnesota-unemployment-rate-hits-9-9-percent/#respond Thu, 18 Jun 2020 17:27:36 +0000 https://tcbmag.com/?p=33600 How much is the Covid-19 pandemic hurting employment in Minnesota?

The Minnesota Department of Employment and Economic Development (DEED) released the latest numbers on Thursday morning: the state’s unemployment rate hit 9.9 percent in May.

That’s the highest unemployment rate the state has posted on records dating back to 1976. For a few months in late 1982 and early 1983, Minnesota’s unemployment rate hit 8.9 percent amid a recession. The state’s unemployment rate during the Great Recession peaked at 8 percent.

The current jobs climate is now officially worse.

“Our economy is facing an unprecedented challenge, which these numbers reflect. Slight job increases this month are a positive sign, but the employment rebound will continue to vary greatly by sector,” said DEED Commissioner Steve Grove in a statement.

The state added 9,800 for the month reflecting an addition of 27,500 private sector jobs and the loss of 17,700 government jobs.

Sectors adding jobs in May included leisure and hospitality, retail, and construction. Sectors losing jobs last month included government, information and manufacturing.

DEED acknowledged that trying to measure unemployment in the current environment is very challenging. The agency revised April’s unemployment rate from the previously reported 8.1 percent up to 8.7 percent.

DEED’s statement on the numbers noted: “The rapid changes in employment due to the pandemic have proved difficult to measure using traditional methodologies. After review of the numbers, April’s seasonally adjusted unemployment rate has been revised up to 8.7% from 8.1%, an unusually large revision.”

DEED’s employment reports are routinely revised and updated.

While there are signs of the economy starting to rebound, it’s tough to tell by the jobs numbers. The latest federal statistics indicate that another 1.5 million Americans filed for jobless benefits last week. A total of 45.7 million have filed for unemployment during the pandemic.

According to the latest DEED data, a total of 781,491 Minnesotans have filed for unemployment insurance benefits since March 16.

 

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Minnesota Companies to Recognize Juneteenth https://tcbmag.com/minnesota-companies-to-recognize-juneteenth/ https://tcbmag.com/minnesota-companies-to-recognize-juneteenth/#respond Thu, 18 Jun 2020 17:11:54 +0000 https://tcbmag.com/?p=33597 For the first time, some of Minnesota’s biggest companies are formally recognizing Juneteenth as a corporate holiday. Juneteenth, which takes place every year on June 19, marks the end of slavery in the U.S.

Target Corp. said all stores will remain open tomorrow, but employees will be paid time and a half ⁠— which is what the company typically pays employees on holidays like Christmas and Thanksgiving. The retailer is also closing its Minneapolis headquarters in observance of Juneteenth. With the country still reeling from ongoing unrest and “racial trauma,” the holiday “takes on additional significance in this moment,” said CEO and chairman Brian Cornell in a news release.

“Moving now to recognize it on an annual basis—as a day to celebrate, further educate ourselves or connect with our communities—is one more important action Target can take as a company to help the country live up to the ideal of moving forward in a new way,” he said.

Best Buy Co. Inc., meanwhile, will allow staffers to take a paid volunteer day any time this year in honor of Juneteenth. Next year, June 19 will be a paid company holiday. In a June 16 statement, company officials said they’re waiting until next year to make Juneteenth a paid holiday because they “wanted to give as much flexibility as possible to accommodate individual schedules.”

Earlier this month, Best Buy CEO Corie Barry announced a host of initiatives to drive “systemic, permanent change.”

U.S. Bank plans to close its branches early on Friday in recognition of Juneteenth. In-person banking will continue until 1 p.m., bank officials said in a news release.

“The events of the past few weeks have changed the conversation and added a sense of urgency that has motivated more people across the globe to act to address social injustice. That begins with acknowledging our rich and diverse history,” said Andy Cecere, chairman, president, and CEO of U.S. Bank. “We are encouraging our employees to use this time to serve in our communities, commit to inclusion and advocacy, or simply educate themselves on this very important topic.”

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New DEED Leader Tackles Economic Issues Facing Immigrants, Refugees https://tcbmag.com/new-deed-leader-tackles-economic-issues-facing-immigrants-refugees/ https://tcbmag.com/new-deed-leader-tackles-economic-issues-facing-immigrants-refugees/#respond Thu, 18 Jun 2020 16:23:53 +0000 https://tcbmag.com/?p=33587 Anisa Hajimumin has her work cut out for her as the state’s new assistant commissioner of immigrant and refugee affairs. Working under Minnesota’s Department of Employment and Economic Development, she’ll examine long-running systems and policies that make it difficult for immigrants and refugees to find work or start a business. 

But Hajimumin appears equipped for the job, having founded and led two businesses that provide support to communities of color, immigrants, and refugees.

She also previously served as the minister of women, development and family affairs in the Puntland region of Somalia, where she drafted and facilitated the passage of Somalia’s first bill to prosecute sexual offenders. Through Hajimumin’s leadership, Somalia was the first African country to sign onto the campaign to end female genital mutilation. As minister, she also directed a program to prevent human trafficking, established a social protection program for women and children, and coordinated the building of a center serving people with disabilities. 

After immigrating to Minnesota in 1996, Hajimumin earned a master’s degree in public administration from St. Paul’s Hamline University. Her new role is supported by a collaborative grant between DEED and the governor’s office.

Entering into the new role in a tumultuous time, Hajimumin is focused on eliminating fear, removing obstacles, and advancing engagement. 

TCB: What are your primary goals, plans, and intentions for the new position?

Hajimumin: I will be focusing on interagency efforts to promote inclusion for immigrants and refugees in Minnesota, and particularly workforce development, which will be the guiding priority. So my team will be able to coordinate interagency efforts in identifying and removing systemic barriers preventing immigrants or refugees from fully participating in Minnesota’s workforce. We’ll also be listening to the problems that refugee populations are facing and how DEED can help find a solution.

Q: How will your previous work and experiences inform your work in this new role?

A | Since I moved to Minnesota in ’96, I have been an active supporter and advocate for immigrant and refugee growth and development here. I went to school here, I grew up here, I’ve spent most of my life in Minnesota, and I’m an immigrant myself, and someone who’s experienced as an entrepreneur, with business executives, and governmental leaders. I served as the minister of women, development and family affairs in Somalia, which is equivalent to the U.S. Department of Health and Human Services, establishing policies and looking at how systems and policies have affected women and children and marginalized communities in Somalia. There are similar things that are happening here. And that is something I’m prepared for. It’s something that I feel I’ve done in the past, which will help me with my experience and educational background doing the same thing: examining state systems and policies that we have here. What is preventing immigrants and refugees from finding work or starting their own business? And how can we have a dialogue between state officials and community members and get on the same page?

Q: Could you talk a little bit more about the similarities that you see from your work in Somalia to what your work will look like in Minnesota?

A | The immigrants and refugees here are minorities. And in Somalia, I was part of the majority advocating for marginalized communities, establishing policies pertaining to the female genital mutilation, and the sexual offense law. 

That helped me understand how to advocate for others that are feeling marginalized. But when I’m here, I’m also considered a minority person, or a member of the community, and it’s something that I feel like I’ve experienced on both sides. But on a policy level, I believe that Minnesota is a place where families are all welcome, regardless of background and ethnicity, but there are systemic barriers. And with those, it’s something that’s universal. However, here in the United States, in general, and particularly Minnesota, we have systemic racial obstacles for people of color, especially immigrants or refugees that were not born and raised here. … It’s quite confusing. And it’s something I myself have also faced in the past. You’re coming to a new country, you’ve learned the language, but also you’re understanding the culture, and then you’re trying to fit in and still trying to strive in life educationally, financially. And successfully establishing that essential level requires you to have to work three times more than the person born and raised here.

Q: What are some of the biggest hurdles you see to the things that you’d like to accomplish as the assistant commissioner?

A | I would say I’m focusing on DEED’s effort to combat Covid-19 and how the state overall is affected economically. But also particularly looking at how immigrants and refugees are affected by the civil unrest and Covid-19. And on top of that, also engaging with employers that are hiring and hearing from immigrants and refugees. They’re good candidates to be hired––but what obstacles are they facing? There are a lot of immigrants and refugees that have been educated in their homeland. But when they come here, their degrees or educational background or experience aren’t considered enough qualification for them to be hired for the profession that they’ve been trained for. For example, many of them are now driving Uber and taxis just to make ends meet. So looking for ways to collaborate with the employers, with the education system, and go from there.

Q: In general, people aren’t as trustful of the government institutions as maybe they have been in the past, and immigrants and refugees face those barriers to access. What are some ways that you’re going to be looking to address those things?

A | The whole thing that has held us all apart is fear. And with fear, we will not be able to reach any goals or establish any results. And for me as an immigrant, and somebody who herself is a Minnesotan, a Somali citizen, and a Somali American, I don’t have that fear and I don’t want to have that fear. Because I want people to face me and say, despite their skin color, I want to be educated about what’s happening within the immigrant and refugee communities. And there is no stupid question. Not only that, I want to be able to engage with the immigrants and refugees to come out and partake in the educational processes in informing other Minnesotans. 

I am very optimistic, despite what’s all happening. I am part of the state, yes. But I am hired to address these issues, I’m hired to work as the liaison between the governor’s office and these communities. And so my job cannot be a place where I am fearful. It has to be something that I’m courageous enough to speak to anybody and talk about this. And the thing is, it’s something I’ve experienced. Working as a minister in Somalia, I was able to sit in front of traditional leaders that did not want to hear from a woman, let alone a diaspora female who was educated abroad. So, if anything, I’m more fired up to really do this and go out there and talk to people. This is my second day in office, and I’ve already got things to put together to hopefully start next week to be engaging with the community members, and start these conversations.

Q: Is there anything else the business community should be aware of as you’re moving through your new responsibilities?

A | We just want to get people engaged and have them talk and engage with the government members. We’re trying to make a difference, so let’s hear the problems so we can establish the solutions.

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Regis Corp. Revenue Down 40 Percent While Pivoting to All-Franchise Model https://tcbmag.com/regis-corp-revenue-down-40-percent-while-pivoting-to-all-franchise-model/ https://tcbmag.com/regis-corp-revenue-down-40-percent-while-pivoting-to-all-franchise-model/#respond Thu, 18 Jun 2020 15:44:26 +0000 https://tcbmag.com/?p=33571 Minneapolis-based Regis Corp., a hair salon owner, operator and franchisor, was already in the process of overhauling its business model when the Covid-19 pandemic hit.

The company reported third quarter fiscal 2020 revenue at $153.8 million, a drop of 40.5 percent compared to a year ago. Regis reported a net loss of $4.5 million for the quarter, compared to a profit of $15.4 million in last year’s third quarter. The company’s third quarter ended on March 31.

But Covid-19 was not to blame for the bulk of the sales drop. Regis is in the process of getting out of the business of running salons to become an all-franchise company. Shedding company-owned locations means less money coming into the corporate office. At the same time, it noted that salon closings in late March due to the pandemic and a 7.9 percent drop in company-owned same store sales were also factors in the results.

“Despite the challenges caused by the pandemic and the government-mandated hibernation of our salon portfolio, we continued to make meaningful progress in all areas of our strategy,” said Hugh Sawyer, chairman, president and CEO of Regis, in a statement. “We remain committed to our transformation to a fully-franchised model on an expeditious timetable, the removal of non-essential G&A [general and administrative expenses] and the deployment of value-enhancing technology.”

The company reported a $75.3 million loss for continuing operations for the quarter. But that number included non-cash charges including “a one-time non-cash goodwill impairment charge of $44.5 million related to the company-owned salon segment [and] non-cash goodwill derecognition charges of $19.8 million associated with the sale of 375 company-owned salons to franchisees in the third quarter.”

In corporate finance, “goodwill” is an intangible asset when one company buys another. The goodwill share of the purchase price reflects a premium that the buyer pays over and above what the fair value of the assets would be. A company’s brand name, reputation, and other factors are part of goodwill. The impairment charges reflect a write-down in the value of that intangible asset.

In January Regis cut approximately 290 jobs estimated to save $19 million a year as part of restructuring related to its conversion to an all-franchise model.

The company also shuttered “90 non-performing company-owned salons in the quarter which were at or near the end of their lease term.” Over the 12 months through the end of March, Regis closed 187 “unprofitable salons.”

Regis has significantly reduced its portfolio of company-owned salons from 3,376 at the end of March 2019 to 1,815 locations at the end of March 2020. That now represents 26.1 percent of the total portfolio of franchise and company-owned salons.

In March the company tapped its credit line for $183 million “to increase its cash position and preserve financial flexibility in light of uncertainty resulting from the COVID-19 pandemic.” Many companies have made similar moves in response to the crisis.

The company reported that about one-third of its salons remain closed: As of June 15, 2020, 3,934 of our franchise salons and 775 of our company-owned salons were open, representing approximately 68% of the Company’s portfolio.

Regis recently relocated its headquarters from Edina to the 3701 Wayzata Boulevard building in Minneapolis along the Interstate 394 corridor.

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Life Time to Lay Off 301 Employees Amid Pandemic https://tcbmag.com/life-time-to-layoff-301-employees-amid-pandemic/ https://tcbmag.com/life-time-to-layoff-301-employees-amid-pandemic/#respond Wed, 17 Jun 2020 23:44:48 +0000 https://tcbmag.com/?p=33484 Chanhassen-based fitness chain Life Time Inc. plans to lay off 301 employees due to the ongoing economic fallout from the Covid-19 pandemic. The company will lay off 250 employees from its headquarters and an additional 51 employees from Life Time’s Millwork facilities in Chaska on August 18. Employees in the Millwork group build and refurbish lockers and cabinetry for Life Time’s clubs.

The job cuts were disclosed in Life Time filings with the Minnesota Department of Employment and Economic Development.

The company’s letters to DEED detail the effects of pandemic closures on its business: “When we closed, we hoped the clubs would reopen quickly. Subsequently, it took nearly three months to reopen approximately two-thirds of our clubs with continued uncertainty around the timing for reopening the remaining one-third of the clubs.”

The pandemic has been particularly tough on the fitness business. On Monday, California-based 24 Hour Fitness filed for bankruptcy and announced plans to close 135 of its 445 locations. In early May, Dallas-based Gold’s Gym filed for bankruptcy.

“These shutdowns inflicted considerable negative financial impact on our company, along with the suspension of nearly four years of new club and business development. Additionally, it may take some months before membership growth and traffic resume to normal levels,” said Natalie Bushaw, a Life Time spokeswoman.

Life Time operates more than 150 clubs in 41 markets across the U.S.

“With this unforeseen business interruption and impact, we have implemented difficult, but necessary, action to reduce our operating expenses, including a 1 percent reduction in our total workforce,” said Bushaw. “The vast majority of this impact is in our real estate, architecture and construction departments given the temporary suspension of new club and business development.”

Bushaw noted that the layoffs were not immediate, and would not take effect until August 18. She added, “All team members will have the opportunity to maintain their company-provided Life Time club membership through December 31, 2020. Additionally, those currently participating in our medical and dental coverage will have the opportunity to maintain these benefits at company expense through December 31, 2020.”

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Target Fast-Tracks Plan to Raise Minimum Wage to $15 an Hour https://tcbmag.com/target-fast-tracks-plan-to-raise-minimum-wage-to-15-an-hour/ https://tcbmag.com/target-fast-tracks-plan-to-raise-minimum-wage-to-15-an-hour/#respond Wed, 17 Jun 2020 17:06:15 +0000 https://tcbmag.com/?p=33435 Target Corp. next month will make good on its promise to boost its minimum wage to $15 an hour, the company announced Wednesday.

The Minneapolis-based retailer in fall 2017 first pledged to reach the $15 an hour mark. At the time, Target increased its minimum wage to $11 an hour and promised to hit $15 an hour by the end of 2020.

Alongside the hourly wage increase, the company said it will provide one-time $200 bonuses to all front-line staffers and distribution center workers. That’s in addition to a slate of April bonuses given to store team leads. The latest bonuses will be disbursed at the end of July to eligible part- and full-time employees, the retailer said in a news release.

So far this year, the company has paid $1 billion more in employee “well-being, safety, and health” than it did in 2019, Target officials noted.

“Everything we aspire to do and be as a company builds on the central role our team members play in our strategy, their dedication to our purpose and the connection they create with our guests and communities,” said chairman and CEO Brian Cornell.

During the company’s first quarter, Cornell said Target spent about $500 million in total on pandemic-related expenses, including store cleanings and child care for employees. The lingering financial impact of Covid-19 remains to be seen, though early signs point to a significant decline in earnings, even for big-box retailers like Target. In the first quarter, for instance, Target’s net income dropped by more than 60 percent, even as digital sales skyrocketed.

Meanwhile, Target on Wednesday also said it will extend virtual health care options to all employees, even if they’re not covered under the company’s health insurance plan. In addition, the retailer said it will provide free counseling services for employees amid Covid-19 and ongoing social unrest.

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D’Amico & Partners Slims Operations to Move Forward https://tcbmag.com/damico-partners-slims-operations-to-move-forward/ https://tcbmag.com/damico-partners-slims-operations-to-move-forward/#respond Wed, 17 Jun 2020 15:41:53 +0000 https://tcbmag.com/?p=33420 D’Amico may be one of the recognizable names in Twin Cities dining and catering, but that doesn’t make the restaurant developer and management company immune from Covid-19’s effects.

The D’Amico & Partners portfolio includes D’Amico Catering as well as the fast casual D’amico & Sons chain in the Twin Cities and Naples, along with Bushel & Peck café at Mill City Museum, Campiello, and Café & Bar Lurcat. From mandatory restaurant closures to a ban on events, the business ground to a near halt when the pandemic hit.

Now, as some of its restaurants begin to open up, co-owner Larry D’Amico says the company has used the downtime to make improvements, to slim down operations for better quality-control, and to serve the community in new ways.

Q | How has your work changed or been disrupted by coronavirus?

Larry D’Amico | Absolutely it’s changed. All of our Minnesota restaurants and cafes were closed for some time. Many still are. Our catering

Larry D’Amico

division was halted because events couldn’t take place. But there is still a lot of work that needs to be done—creating new menus, setting up new safety parameters, checking in with our staff who are not back to work yet, and meeting with our landlords and suppliers, for example. So, yes, work has been disrupted, but there are a lot of things to do because of that. We must look forward.

Q | Anything you’re able to do right now to compensate for lost work or help your community?

A | We’ve been able to shift our D’Amico & Sons location in Golden Valley to a take-out only operation. The Brooklyn [Park] restaurant at the Edinburgh USA golf course is now open for dine-in service and take-out. This has been really successful, and we feel grateful about still being able to feed our community and connecting with our customers again.

During this time, we also reopened our kitchen to prepare meals for individuals in need through local-area YMCA locations in partnership with Loaves & Fishes. My wife Dianne and I joined a team of D’Amico volunteers and chefs to cook, package, and deliver 1,000 healthy meals per week.

We’ve also been doing a number of things to help the community in the last few weeks as the need for food has grown. D’Amico Catering has a number of trucks that are not being used right now, so we’ve been assisting local pop-up food drives to move supplies from one spot to another. Additionally, we’re partnering with a local food shelf to provide lunches for their volunteers. Feeding people is important—it’s the heart of what we do.

Q | Any bright spots in this crisis that you’d like to share?

A | I like that this time allows us to focus on our menus. We’re looking at making [operations] a little bit smaller, which we feel will result in an even higher quality experience. It also helps with labor which is one of the biggest challenges that the restaurant industry is facing right now. Just like back in 2008 when the recession hit, this crisis is forcing us to run a bit leaner and that is the perfect incubator for new solutions and ideas.

The support my brother [business partner Richard D’Amico] and I have received during this pandemic has been impactful. I can’t tell you the number of emails, calls, and texts that we’ve received saying, “No need to call me back, but just wanted you to know we’re thinking about you.” We also created an emergency fund for our employees that our customers have been extremely generous in donating to. We really appreciate that. Gift cards have been big too. The sales right now are really helpful, but it’s the promise that they’ll be back that puts a smile on my face.

Q | Do you anticipate getting “back to normal” any time soon?

A | I don’t think about going back to normal, I just think about what we need to tackle today. No one knows exactly what normal will be in the future.

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