For better or for worse, it’s difficult to separate the fortunes of Austin from those of South by Southwest, the once-boutique conference that has evolved into a pillar of the city’s economy and culture. Now in what would have been its 34th year, SXSW sees some 200,000 attendees swarm the city over a period of 10 days, generating hundreds of millions of dollars for the local economy — $355.9 million last year, according to SXSW’s analysis. But now, in the wake of the global coronavirus outbreak, Austin Mayor Steve Adler has declared a state of “local disaster” for the city, officially canceling SXSW.
The coronavirus outbreak, which is veering into pandemic territory, has forced the cancellation of major events all over the world because of the risk of spreading the virus; Google has even canceled all in-person job interviews for the foreseeable future. Critics called on SXSW to follow suit, but until Friday it resisted, insisting that the event would go on. One online petition urging SXSW organizers to cancel the festival gathered over 50,000 signatures in the days leading up to the city’s order. “I believe that having an event like this is irresponsible amid an outbreak,” wrote organizer Shaya Lee.
The economic impact of calling off SXSW will potentially be devastating: The annual infusion of hundreds of millions of dollars from visitors is deeply embedded in the budgets of virtually every public and private enterprise in the city, and much of that money flows into the local bar and restaurant scene, which has increasingly come to rely on the annual tidal wave of cash to survive in Austin. Operating costs in the city have exploded since the end of the 2008 recession; downtown commercial rents have risen, on average, by some 61 percent per square foot over the last 10 years. “There is usually such a lull after the New Year that it is the perfect thing to kick us all into gear for the spring,” said Matthew Carter of East Austin barbecue restaurant EastSide Tavern.
Austin restaurant and bar owners and were already concerned about the financial impact of a diminished SXSW, as a number of companies had pulled out in the days leading up to the festival being called off: Twitter, Facebook, Intel, Mashable, TikTok, Amazon, Vevo, Intel, Apple, Netflix, WarnerMedia, Warner Music Group, CNN, SAP, and China Gathering, which brings together Chinese companies during the festival. As a result, SXSW’s programming, along with the number of corporate attendees — involved in keynotes, panel discussions, movie premieres, parties, and activations — was shrinking day by day.
Massive downtown beer garden and sausage restaurant Banger’s, which is located in the heart of SXSW, was supposed to host a two-day StubHub showcase and a two-day immersive experience for 20th Century Studios’ film The New Mutants. “We’ve all spent a bunch of money and an untold amount of time prepping and planning” on these events, owner Ben Siegel said. “If attendance is down and the overall energy and vibe of the festival is diminished, then I’m sure it would have a negative impact on business, which would also have a negative impact on our employees.”
If you’ve never been to SXSW, imagine hordes of visitors transforming an entire city into a giant party that takes over every business, hotel, and street. During a typical SXSW, the influx of attendees become an unending stream of customers for coffee shops, restaurants, and bars from dawn until the late into the night, while immersive brand events and corporate dinners fill virtually every dining space in downtown Austin; many restaurants are bought out wholesale, booked months if not a year in advance. Practically every other local restaurant, bar, catering company, and liquor brand is enlisted to serve food and make drinks at events.
While downtown businesses are packed with events during the first weekend of the festival, East Austin restaurants tend to rely on catering jobs. East Cesar Chavez barbecue restaurant La Barbecue had already seen the loss of one client, according to co-owner Ali Clem. Multiple potential bids for private events and catering for the Tex-Mex restaurant Tamale House East had been pulled in the days leading up to the cancelation, according to co-owner Carmen Valera. And Margarita Mendez, the co-owner of East Austin taco restaurant and truck Pueblo Viejo was worried about being able to anticipate their needs in terms of staffing and product. “It will for sure feel unorganized and chaotic,” she said.
It’s not just the loss of money that business owners are worried about. Chi’lantro owner Jae Kim is grateful for SXSW attendees, who have frequented the restaurants since it opened in 2010. While he wasn’t sure how a smaller SXSW would affect sales, he is worried about the loss of exposure: “I know that we will be losing a lot of intangible opportunities like press, networking, and social media,” he said.
Kim predicts that Chi’lantro will potentially lose 15 to 30 percent in additional sales at its three locations around SXSW’s real estate footprint. Downtown coffee shop Hideout Coffee owner Kareem Badr likewise predicts that his will would lose 20 to 25 percent of its income. Popular taco truck Veracruz All Natural typically runs a location near the heart of SXSW on East Cesar Chavez; now that SXSW is canceled, not only will the restaurant see loss of sales, it will have “the dilemma of either paying added employees for help we no longer need or informing the temporary employees they are no longer needed,” said staffer Ryan Myers. In other words, there will be job losses, as many restaurants and bars will no longer need additional seasonal staff.
Even for workers with more permanent staff positions, a SXSW-less year will be crushing. “Our employees depend on tips and increased hours to support their families,” explained Matt Cisneros of Cisco’s, the East Austin Tex-Mex institution. Staffers have come to expect the extra revenue boost usually made during SXSW, which in turn often go towards expenses like rent.
Somewhat surprisingly, some owners weren’t too concerned about a slimmed-down SXSW or even a full-blown cancellation. Even though SXSW “is normally the biggest two weeks of the whole year” for Caffe Medici, which features not one, but two downtown locations, “we will live through it,” if the festival is canceled, said CEO Michael Vaclav. “But it is a nice boost for us every year.”
Josh Loving of downtown bar Small Victory noted that, while the venue has two SXSW events lined up and that “it would suck to lose those extra sales,” he said it’s “not something that is make-or-break for us.”
Richard Kerswill, the general manager of East Austin bar Ah Sing Den, takes a more holistic perspective altogether: “All the thousands of people rolling through our town is not worth the money if it means the possibility of us locals getting sick,” he said.
This post was updated to reflect the cancellation of SXSW.