Budget Rent A Car Inc. has closed its Van Ness Avenue location and will close its Union Square shop next month, parent firm Avis Budget Group (CAR) representatives said this week. Avis Budget VP John Barrows cited high rent and other fixed costs as the reason forthe closures, while others suggest consolidation at the troubled company is behind the move.
“It’s because these locations have proven to be unprofitable, primarily because of high fixed costs … such as rent,” Barrows said. “Demand issues were not the reason for closing. There is still a Budget location at the Hyatt Regency Embarcadero.”
The company will also open a new office at 495 Bay St. near Fisherman’s Wharf in January, he said.
The Union Square location at 321 Mason St. will close Dec. 31. The 1600 Van Ness Ave. location already closed this autumn. Of the 35 total employees at the two locations, eight are to be laid off and the rest are offered jobs at the Budget office at the San Francisco International Airport, which has 290 staff members. All of those who accept airport jobs will be bumping existing airport-location employees, who will be laid off, Barrows said.
Teamsters Local 856 representative Mike Lagomarsino, which represents the workers, indicated that talks were still ongoing last week.
“For some reason, they decided to close Budget after being open for 47 years,” Union Square customer service representative Pauline Mack said. “I’m going to the airport, because I have seniority, over 20 years of company time.”
She added that she’s concerned about the company’s future. Avis Budget Group posted a $1.01 billion loss for the third quarter amid the breakup of its parent firm Cendant, according to the Associated Press. The industry is facing increased pressure as automakers, particularly Ford Motor Co. (F) and General Motors Corp. (GM) have decided to charge rental agencies more for cars and offer fewer buyback deals. Though Avis Budget deals with several automakers, it primarily relies on those two corporations for its fleet.
“I think all those things are cyclical. The entire industry is confronting sharply increased prices for cars. It’s part of the strategicdirection that Ford and GM have chosen to take,” Barrows said.
He did not say how many other sites were being closed nationally, citing the high prices of San Francisco rent. The firm rented its Van Ness location from the Catholic Archdiocese of San Francisco, and its Mason Street location is in the Downtown Center Garage, which is owned by Harsch Investments.
Archdiocese Director of Real Estate Les McDonald said there was no rent increase, and that he’s entertaining inquiries about the space from car-parking and rental companies.
“They left because they’re consolidating. It was a cutback on their side, and our relationship with Budget was absolutely great,” he said.