Casino-industry crisis hurting small businesses

ATLANTIC CITY - It wasn't long ago that the ovens at Formica Bros. Bakery were going full blast - putting out 50,000 pieces of bread a day. As recently as 2007, the nearly century-old establishment in the city's Ducktown section employed 70 people.

Owner Frank Formica recalls how orders from casinos were like yeast to his dough, lifting his bakery's bottom line ever higher.

Then, pummeled by out-of-state competitors, the casinos began to fall into a swoon, and this year, as four of them closed, Formica lost a big chunk of his business "in the blink of an eye." He is down to 35,000 to 40,000 pieces a day, employs 40, and is sending his trucks ever farther to find new customers.

The bleeding may not be over. Trump Entertainment Resorts Inc., owner of the Trump Taj Mahal, has threatened to close the casino as early as Saturday if it fails to reach an agreement with the union.

Small businesses in and around Atlantic City are hurting as the casino industry stumbles and thousands lose their jobs. January and February, typically bad for business at the Shore, will be even worse this year, says Richard Perniciaro, director of the Center for Regional and Business Research at Atlantic Cape Community College.

"You are starting to see places close that are mostly on the margins of downtown, like the residential neighborhoods," Perniciaro said. "You are starting to see the same thing on the mainland as restaurants close - including TGI Fridays and East Bay Crab & Grille, both in Egg Harbor Township, and Jo Jo's, a family-owned Italian restaurant in Northfield.

"We know every casino job loss is another half-job lost, so if 8,000 casino jobs are gone, that's another 4,000 noncasino jobs lost. It's starting to add up quickly, and people are starting to see empty houses on their blocks, like in Absecon."

When the Atlantic Club shut in January, Formica lost orders for 1,000 pieces of bread a day.

Showboat used to take 2,000 pieces a day; Revel toward the end, 1,000; and Trump Plaza, 2,000 to 3,000 a day.

Formica, 62, who bought the bakery from his uncles in 1987, believes those in charge of the resort were ill-prepared for the onslaught of regional gambling competition.

"I'm angry," he said, "because we had 30 years to prepare for this day and we blew it."

The bakery also supplies restaurants - about 50 percent of its business - schools, convenience stores, and supermarkets.

Casinos make up about a fifth of its business, and because of their proximity - less than a mile from the bakery at 2310 Arctic Ave. - Formica said they had been one of the more profitable parts of his business.

He estimated the four closed casinos represented about a half-million dollars a year in sales.

"That is only the tip of the iceberg," he said, "because with the loss of [casino] employees, you're talking about 10,000 families that can't buy a sub, that can't go to restaurants, which means less sales."

Other clients the bakery supplies - such as pizza shops and bars - are down about 30 percent.

Formica began extending the bakery's reach five years ago. He accelerated the effort this year and has made inroads in the Cape May market.

But the new accounts don't come cheap.

"I had to put two trucks on the road and have them travel 40 to 50 miles each way seven days a week," he said, "when the equivalent was within a one-mile radius of my bakery."

That has totaled 160 hours per week of additional manpower and hundreds of additional dollars in fuel costs.

The Taj Mahal, whose ownership is locked in a dispute with Unite Here Local 54, could be the next big customer to go.

"All the other bakeries quit the Taj Mahal when they filed for bankruptcy," Formica said. "Their managers came to me and said, 'Can you stick it out with us?' I said, 'Yes' - what can I do? I am sticking it out with them."

And he's doing it on credit. "I believe the Taj Mahal will survive," he said.

Formica is deeply rooted in the community. He's chairman of the Atlantic County Board of Chosen Freeholders and started the Ducktown Revitalization Association, which he still heads.

The family's local history began in 1919, when Francesco Formica (Frank's grandfather) and his wife, Rosa, opened the bakery on the 100 block of Mississippi Avenue.

They used a simple recipe for their Italian bread, Formica said - flour, salt, yeast, Pinelands water, and time.

"You can't short-circuit. Other bakeries put enzymes in it, they put dough conditioners, they like to speed it up because it's easy.

"We never did that," he said.

By 1928, as business grew, the bakery moved to 2310 Arctic Ave., where it has been since.

Last week, the bakery was humming. This time of year is a busy period. Employee Paul Harris prepared a stack of sub bread to deliver to the White House Sub Shop across the street.

"Definitely a good product," said White House's longtime manager, Joe Gallagher, 55, as he made an Italian hoagie. "They have something that works. Everything is handmade and fresh." He had praise, too, for the bread he also orders from a Formica rival, A. Rando Bakery.

Formica Bros. was around in the Roaring '20s and during the Boardwalk Empire era. It survived the Great Depression and enjoyed the great convention business of the '50s and '60s.

But by the 1970s, as planes displaced trains, Atlantic City was no longer a premiere vacation destination. The city turned to gambling to bring back the crowds, and in 1978, Resorts casino opened.

The baking industry also was changing. In the 1960s, there were four bakeries in Ducktown. There are now two.

"We had to reinvent ourselves in the 1970s," Formica said, "but in a way where we'd never lose our home base - the Atlantic City sub bread."

In the late 1990s, the bakery began expanding its lines, introducing artisan breads. It now sells 200 varieties of handcrafted bread, including cranberry walnut raisin and Asiago cheese.

Despite Atlantic City's high unemployment rate - 11.2 percent, nearly double the 5.8 percent nationally, Formica is focused on what he sees as positives.

Numerous bills are coursing through the state Legislature in Trenton to help the casinos and their displaced casino workers. He cites a $35 million investment to transform Gardiner's Basin into a destination like Baltimore's Inner Harbor, and the planned opening of a Bass Pro Shop in the spring a stone's throw from his bakery.

"We believe that Atlantic City is close to stabilization. You can see it by the rising gaming revenue among the remaining casinos." But time - the precious ingredient in his family's famous bread - is the resort's enemy.

"Atlantic City needs time, but time is the one thing [city leaders] don't have in abundance because there's limited moneys," Formica said.

"If all the dollars in Atlantic City right now were arrows, you would have to hit the bull's-eye with just about every one of them to get this right."