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{shortcode-429a20a43b31c14ee603587b9f7215faac9b0e1d}or Koushik “Babu” Koganti, whose South Indian restaurant Madras Dosa Co. opened just a few weeks ago in Harvard Square, the response from customers has been “tremendous.”

“People started coming out a lot for the last one year,” Koganti said, adding he has observed a change in the “mindset” and spending habits of local consumers.

“They don’t know what’s going to happen. So people want to do everything, whatever they want to do now,” Koganti said.

Denise A. Jillson, executive director of the Harvard Square Business Association, said she has seen many “exciting” new restaurants and businesses open in recent months, including many owned by “young entrepreneurs.”

“There’s a new vibe emerging,” Jillson added.

In the last year, Madras Dosa Co., Roust Deli, Möge Tee, Faro Café, Taiyaki NYC, Tiger Sugar, and Cava were just some of the businesses that opened their doors to Harvard Square. In the coming months, Blank Street Coffee and Joe’s Pizza are also expected to open.

Yet while Harvard Square has welcomed a bevy of new businesses in the last year — ranging from vintage clothing stores to boba tea shops to athletic facilities — a number of longstanding businesses continue to feel the lingering pains of the pandemic.

Pandemic Pains Remain

While some new business owners in the Square said they escaped the economic downturn caused by Covid-19, other longstanding businesses continue to feel the burden of pandemic-driven uncertainty and labor shortages.

Some well-known Harvard Square businesses have not survived these pressures. In the last year, the Square has seen the closures of Bonchon, Darwin’s Ltd., and Milk Bar, among others.

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During the pandemic, the Charles Hotel reduced its workforce by around 80 of its nearly 300 total employees, according to Alex Attia, the hotel’s general manager.

While there has been a “nice rebound” from the peak of the pandemic, the hotel is still in its “recovery period,” Attia said, which he expects to be over by 2025 at the earliest.

The hotel’s guest bookings are “Harvard-driven,” Attia added, and as students depart campus for the summer, he is “very concerned” about the impact on business.

Labor shortages also continue to impact the hotel, he said.

“We need to continue to rethink, also, how can we do better on attracting employees, and can we make sure that we’re getting the right employees for the right job so they can stay longer?” Attia said.

According to Theodora M. Skeadas ’12, executive director of Cambridge Local First — a nonprofit network of locally owned, independent businesses in Cambridge — the labor market is “stabilizing in the new normal,” in particular because of the persistence of remote work.

“People want work that’s closer to home — they don’t want to commute as much,” Skeadas said. “The reality is, Cambridge is really expensive. And a lot of people who work at our small businesses can’t afford to live in Cambridge, and they found jobs closer to home and in cities outside of Boston.”

At Irving House at Harvard — a hotel that has served Harvard Square visitors for nearly eight decades — hiring has similarly been a “challenge,” according to Rachael Solem, the establishment’s owner and president. As a result, the hotel has given raises to current staff as well as increased the starting wage.

“While I am happy to be able to do this, it is scary to commit to a much bigger payroll when we have experienced the kind of loss we did in 2020,” Solem wrote in an emailed statement.

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The restaurant and drinks scene in the Square is no different. According to Alvin Lu, the owner of Tiger Sugar in Harvard Square, good employees can be difficult to find.

“Because they’re in such demand, usually the good ones are taken, or they require a much higher pay,” Lu said.

“Being that the cost of goods has gone up and margins are being squeezed, we just need to find ways to be more efficient, operationally,” Lu added.

‘A Very Wealthy City’

Since the start of the pandemic, Cambridge’s government has furnished at least $6.6 million in direct relief to more than 400 small businesses through federally funded grants, the Mayor’s Disaster Relief Fund, and other programs, according to city data collected through August 2022.

Of the relief funds, almost $1.5 million in federal funding was distributed to local businesses through the American Rescue Plan Act.

For Irving House, which sold one of its three buildings in summer 2020 to stay afloat, city government assistance has proven crucial.

“We applied for and received all the government assistance possible, and have survived due to that assistance,” Solem wrote in an email.

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Of the Cambridge small businesses that applied, more than 80 percent — including Irving House — received city government assistance.

The figure is markedly higher than the 26 percent of applying businesses in Boston that received relief, according to a February 2022 WGBH News interview with Natalia Urtubey, Boston’s director of small business at the time.

“We have a very wealthy city, and the city government was able to offer a lot of resources, including grants — money to businesses to help them stay afloat during this time,” Skeadas said of Cambridge.

The resources Cambridge offered, according to Jillson, allowed businesses to overcome pandemic-driven economic difficulties.

“Fewer than originally anticipated” businesses permanently closed, she said, “because the community did pull together and because there were so many resources available to our business community here in Cambridge.”

“The community rallied,” Jillson said.

On top of government aid, groups like the Harvard Square Business Association and Cambridge Local First have promoted locally owned businesses and encouraged consumers to shop local.

HSBA is active on social media and features many of the new businesses that have arrived in the Square recently.

Cambridge Local First hosts “shop local” campaigns during the holiday season and runs educational programming on the benefits of a strong local economy, according to Skeadas.

In addition, Cambridge Local First advocates for policies that will “create a level playing field for small businesses” at all levels of government, per Skeadas.

New Businesses, New Challenges

Even as small business pandemic relief subsides, new businesses are flocking to Harvard Square.

Recently, there has been a wave of store openings, including boba tea shops and clothing stores. In just the past year, three boba tea shops — Gong Cha, Tiger Sugar, and Möge Tee — joined Harvard Square, which previously only hosted boba shop Kung Fu Tea.

Targeting both tourists and students, So Lim Ting, co-owner of Möge Tee, said the Square affords businesses like his an ideal location.

“Everybody [who] comes to Boston, they go to Harvard, definitely,” he said.

Pardis Saffari, director of Cambridge’s Economic Opportunity and Development Division, described the Square as a “regional hub, providing easy access for residents from surrounding towns to come to the city.”

“These advantages provide great opportunities for our businesses to have a consistent customer base on the weekdays and weekends, which many other commercial districts (like downtowns) lack,” Saffari wrote in an email.

Dixon Leung, operating partner of Square newcomer WakuWaku Ramen and Sake, also cited the vast potential clientele of college students and tourists as a major factor for expanding into Harvard Square.

Amid the recent additions to the Square, business owners have had to adapt creatively to new challenges that have emerged.

In addition to rising labor costs, the wave of new business openings has increased competition for shops such as Tiger Sugar, according to Lu.

“It’s overly saturated,” Lu said. “There’s just so many restaurants and food-beverage places.”

Lu said to account for labor shortages, Tiger Sugar has been experimenting with touchscreen point-of-sale systems, self-ordering kiosks, and other technologies to substitute for staff.

“On the product side of things, it’s just trying to be innovative,” Lu said. “Keep up with the trends. Also run promotions and collaborations with possibly bigger brands.”

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Cecilia Hermawan, the owner of the new vintage clothing store Vico Style, said it is important to run creative marketing campaigns to attract customers.

“Post-pandemic, I feel like people are more interested to interact with one another and going into brick and mortar,” Hermawan said. “But also at the same time as an entrepreneur, I have to think creatively on how to win people’s share of wallet.”

Though many of the new entrants to the Square are chain and franchise establishments — including Tiger Sugar, Le Macaron, and CAVA — the majority of businesses in the neighborhood remain locally owned, according to both Saffari and Jillson.

“We’ve been watching the number of locally owned independents in the Square for almost two decades, and the number has hovered between 70 and 75 percent for two decades,” Jillson said. “I don’t anticipate any changes in that number.”

‘A New Landscape’

Even as longstanding businesses like Irving House anticipate “better and better” circumstances, uncertainty remains.

“Having experienced 2020 with all of its losses (employees, money, one of our guesthouses) I will probably never feel quite confident again about how solid our place in the market is,” wrote Solem, the owner of Irving House.

“It still hurts to think about; it feels like a failure, as I tried to keep the place open somehow but could not,” Solem added. “It’s a new landscape in so many ways.”

For Attia, a large part of his business outlook relies on having students on campus, which he said “generates energy in this Square that affects the business, but affects our psyche as well.”

“When we see people around us, we feel good about it,” Attia said.

He added, however, that the ongoing economic recovery continues to present challenges for his business.

“And when our office space is empty, and our restaurants are half full, and our rooms are not sold, then you start rethinking the whole process of how long is this going to last, and can I plan for 90 days from now, or is it the year from now?” Attia said.

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Skeadas said as large corporations like Amazon continue to gain ground among consumers, “there just isn’t enough legislative work being done to create sustainable, thriving locally owned economies.” As a result, she said, Cambridge Local First has been focused on antitrust advocacy in the recent year.

“We’re doing the best we can, but it’s certainly very challenging,” Skeadas said.

Many new business owners expressed optimism about the economic state of the Square.

“I think it’s pretty back to normal. I talked with my landlord about it before opening and she said the businesses in Harvard Square have been better than ever,” said Jenna E. Cea-Curry, owner of the Attic, a newly opened Massachusetts Ave. clothing store.

Similarly, Koganti, who manages another Madras Dosa restaurant in Seaport, said he is optimistic about his Harvard Square endeavor.

“I see most of restaurants are doing great after the pandemic now,” Koganti said.

Attia said despite ongoing labor and economic challenges, Harvard Square entrepreneurs should work toward a positive future.

“If we’re not optimistic now, after this horrible pandemic, then we’ll never be optimistic,” Attia said.

—Staff writer Caroline K. Hsu can be reached at caroline.hsu@thecrimson.com. Follow her on Twitter @CarolineHsu_.

—Staff writer Sidney K. Lee can be reached at sidney.lee@thecrimson.com. Follow her on Twitter @sidneyklee.

—Staff writer Marina Qu can be reached at marina.qu@thecrimson.com. Follow her on Twitter @MingyiQu.