Security Situation Hits Jerusalem Business Hard: ‘Mahane Yehuda Market Is Half Empty’

Business owners in the capital tell of a steep drop in sales, which started back in the summer during the war in Gaza. Malls relatively stable.

Ilya Melnikov

Elkana Wissenshtern sold only 4,000 shekels-worth ($1,050) of fish on Tuesday – about half what he sells on an average day at his stall in Jerusalem’s Mahane Yehuda market. A second-generation stallholder, Wissenshtern is just one of many Jerusalem business owners worried about their drop in sales in recent weeks.

Businesses all over the country had yet to recover from the summer conflict in Gaza, and now are having to deal with disturbances – especially in the capital – that could very well turn into a third intifada. All this at a time with strong signs of a slowdown in consumer spending – all of which leaves Jerusalem businesses in a complex situation.

Mahane Yehuda, known locally as the Shuk (Market), is a crowded maze of small streets and alleyways just west of downtown Jerusalem. It is a beloved culinary paradise for tourists, epicures and housewives alike – for locals and others who come from all over the country. You can buy almost anything, at a wide range of prices, although the emphasis is on thrifty – fresh produce and plastic kitchen gadgets; fabric and religious items; very fresh meat and fish; Moroccan, Ethiopian, Yemenite, and even Ashkenazi fare; and, in recent years, even gourmet meals, as well as one of the best places in the country to stop and grab a cheap meal. It was originally an open air market, but in recent years parts of it have been upgraded and modernized – and covered.

“The market is empty and sales have deteriorated over the past few weeks,” said Wissenshtern. “People are scared to travel on the [light rail] train because of all the mess there was, and sales have dropped significantly – by 30% to 40%. I serve mostly Jerusalem residents and, because of the security situation, they prefer to go to the proper supermarket and not come here. In the last two days, it was really quiet here. There is room to ride a bicycle as if we were on a street, and not in the market,” he said.

The Haba family is known in Jerusalem for running bakeries since the 1950s. The coffee shop/restaurant Trattoria Haba, which it runs at the entrance to the Mahane Yehuda market, is suffering from a drop in sales, for the second time in the past few months.

“Headlines in the media like ‘The city is burning’ or ‘A city under siege’ certainly don’t help what is happening here,” said Michael Katz, the restaurant’s chef. He says he was surprised by the drop in business, since “Jerusalemites usually are faithful customers who are not particularly influenced by such things. Most of the decline comes from overseas tourism, which has shrunk a little – and the Tel Avivians are coming less, too. They are actually coming from the rest of the country. All told, in the last week and a half, we have seen a 15% drop in sales, since we are a restaurant that mostly serves Jerusalemites for their daily needs,” he said.

‘This is the country we live in’

The light rail, which has become the most important public transportation system in the center of town in recent years, has suffered from numerous incidents of stone throwing. This has led to a significant reduction in service and a drop in the number of people traveling to the city center and Mahane Yehuda.

In general, it seems the businesses hurting the most from the security situation and suffering the drop in sales are those located on the main thoroughfares. In contrast, those located in indoor shopping malls have been hurt less. In addition, those businesses that are considered forms of entertainment – in particular, those favored by tourists – have been hit hardest and have few customers.

Store owners in the open air shopping mall at Mamilla, near the Old City, are among the worst hit by recent security incidents – both because it is open, and also because most of its business comes from tourists (foreigners and Israelis). A senior executive of a fashion store chain said, “All our branches in Jerusalem have been hurt, but the Mamilla branch sales have fallen by 30%, as well as at stores we operate on the street. In the Malha mall, our sales have fallen by only 10%. In practice, the drop in sales is a trend that started during the summer during [Operation] Protective Edge. During the [Jewish] holidays, sales improved a bit – since tourists came to celebrate in Israel – and now the deterioration has returned,” he said.

“We have had better days,” admits Shmuel Ben Moshe, CEO of the Mamilla complex. “The security situation definitely has an influence, but there is nothing to be done – this is the country we live in, and we need to wait patiently. Many Israeli tourists are canceling [their trips to Jerusalem], as are tourists from overseas. Nonetheless, we have been through harder times during part of Operation Protective Edge – for example, after the murder of the Arab teenager [Mohammed Abu Khdeir, on July 2]. The reality in Jerusalem is less bad than how the media presents it. People are continuing to live in the city, and tourists who are already in Israel are continuing to wander around,” said Ben Moshe.

‘People prefer enclosed places’

As opposed to the Mamilla mall, Jerusalem’s two large indoor malls, Malha and Hadar, actually say sales have risen. “In Malha, there is an increase in traffic and sales in the past few days. The rise in traffic is about 15%. The mall ‘transmits’ personal security to the public, and there is a clear preference to come to Malha over the open places,” said Arnon Toren, CEO of the Azrieli Group, Israel’s largest owner and operator of shopping malls.

“What we are seeing these days in Jerusalem, and will expand later to other areas, too, is that the open commercial streets have been hit hard. For example, businesses on Jaffa Road [one of Jerusalem’s main arteries] are reporting a drop of 30% to 40% in sales in the last two weeks,” said Nir Shmol, CEO of Snir, which markets shopping malls and shopping centers.

“When people are [being stabbed] in the streets, we see a fall in traffic on the main streets, and people prefer to focus their purchases on enclosed places. When people feel a lack of security, they prefer to avoid places filled with people and be in enclosed locations. For this reason, after the second intifada the malls blossomed. Until then, there weren’t security guards in the malls,” he added.

Coffee shop chains in the capital report no slowdown. Danny Mishel, CEO of the Aroma Israel chain, says there hasn’t been a real drop in average sales in Jerusalem, except for Mamilla, where sales have been dropping and the place empties out in the evenings.

“Despite the tensions in Jerusalem, no change or unusual trend has been felt,” said Noam Zimerman, CEO of the Cafe Cafe chain. “We should note that most of our branches are located in malls and shopping centers.” It is clear the public prefers to spend its time relaxing in such places: “Guarded and enclosed,” as Zimerman describes them.

Seriously hurts cash flow

It turns out that Eran Ben Arush chose a bad time to open his prestigious restaurant, LEO Bistro, in the Cinema City complex in Jerusalem, just seven months ago. The complex is an entertainment center, boasting 19 movie theaters, a museum, and other cultural sites, and usually enjoys the company of diplomats and tourists, as well as Israelis. But its audience has chosen to stay away in recent weeks.

“At the beginning it was wonderful, but then came Protective Edge and sales fell by 80%,” said Ben Arush. Because it is a fancy restaurant with a big name chef, people come when they are going out for a good time and feeling in a good mood, he noted. After the end of Operation Protective Edge, things improved for a while, but now things have gotten much worse. After the fatal stabbing of two Israelis earlier this week, Ben Arush saw some 40% to 50% of reservations canceled. Many of his customers are diplomats, and they have stopped visiting, he says.

Of course, things were already bad: In the two weeks before the fatal attacks, reservations were already down 30%.

Jerusalem businesses cannot operate like this for very long. After just one month of slowdown, it can take six months for a business to recover from a cash flow perspective, says Ben Arush. When you add the security situation to the economic situation, it can herald a catastrophe, he warns.

Itamar Hefetz, the owner of the re:bar juice chain, says his operations are down 7% to 12% in his 11 Jerusalem branches. “The situation hurts mostly on the street branches, such as on Jaffa Road, Mahane Yehuda, the German Colony, and others. First, the traffic during evening hours has thinned out greatly. Second, there is a significant drop in the chain’s customers from the Arab community, who are usually a significant buying power.” And add to this the drop in tourism. “It seems that people prefer to spend time in other places in Israel, not in Jerusalem,” sighed Hefetz.