Riots rock nutrition stores across the country

The GNC store in downtown Pittsburgh. Syd’s Pharmacy & Kosher Vitamins in Los Angeles. The Vitamin Shoppe in Tampa. Great Health Nutrition in St. Paul. 

A trail of destruction spans across the country, marked by demonstrators who took to the streets to protest police brutality.

The nation, still reeling from a pandemic that led to unemployment rates not seen since the Great Depression, is now grappling with many neighborhoods in shambles. 

Much of the destruction is unfolding over social media, such as this post on Twitter​, which showed a crowd in St. Paul smashing the windows of Vitamin Shoppe along with other stores. 

Hanging by a thread 

GNC, already struggling from financial woes and added coronavirus-related economic difficulties, has an estimated $700 million debt hanging over its head. Last month, the vitamin retailer cut a deal with lenders to extend its repayment deadline as it continues to look for ways to restructure and refinance its debt.

“It is assumed that GNC would have proper insurance policies with corporate stores and requirements with franchisees, but this certainly doesn’t help a struggling retail business that has been aggressively cutting costs for the last few years,”​ said Joshua Schall of J. Schall Consulting. “While GNC will most likely rebuild their store under the downtown Pittsburgh headquarters, other damaged stores could be moved to the store optimization list to avoid utilization of free cash flows.”​

GNC President and CEO Ken Martindale said that at the end of April, about 40%, or about 1,400 of GNC’s corporate and franchise stores had closed. Since then, about 100 domestic stores have reopened. How many GNC stores will reopen after this latest round of losses is yet to be known. The retailer did not respond to our request for comment.

“To keep getting kicked when you’re already down”​

1life CBD, which has three locations in Minnesota, were ramping up for their reopening after being shut down for over two months. 

“It's like ‘finally!’ Even though COVID still exists, finally, we're starting to get some normalcy back into the business. You know, we were starting to get our employees back and we were excited. It felt good. We were rejuvenated,”​ explained manager Jim Cramond. “And yeah, literally 3-4 days later we were broken into and all this happened.”​

Cramond explained that the company has a warehouse in Eden Prairie, where they make and store all of their products. They decided to move all their inventory from their warehouse and two other stores to their Uptown location, planning to make Uptown their new headquarters. But just four days after doing so, the store was ransacked. Looters made away with about two-thirds of 1Life CBD’s inventory, according to Cramond. 

“It's very unfortunate, you know, to just keep on getting kicked. To keep on getting  kicked when you're already down. There was COVID for two and a half months and then you're trying to get back to normal and then WHAM.”​

Cramond said he’s not sure what insurance will cover, if anything. 

“The 1-2 punch of COVID-19 and damage from civil commotion is definitely going to complicate the insurers’ calculations for business interruption claims. The idle or restricted periods of business from COVID-19 cause income projections to be compressed, similar to when a business would have multiple storms in one year,” ​explained Schall. “With smaller nutrition stores already facing bleak situations, additional costs from paying deductibles or replacing inventory from being underinsured could potentially be insurmountable. That being said, I am bullish on small business entrepreneurs viewing this challenging situation from new perspectives and coming up with countermeasures. This adaptive capability is the foundation of the small business community.”​

A bailout could be in the works 

There is growing talk that lawmakers may be looking to pass another round of economic stimulus measures before they leave for July recess. The talks were underway well before the riots, but the additional financial devastation has ushered in new support. 

Following a weekend that unleashed violence and destruction, there is growing bipartisan support for additional stimulus to support state and local governments —  however, it is still in the discussion phase. The US Small Business Administration did not respond to NutraIngredients-USA​ when asked if they have any plans to support businesses impacted by the riots. 

The official tally of damage to businesses, property and the economy from the large scale social unrest has yet to be determined.