Crain's Cleveland Business, January 22, 2024

CRAINSCLEVELAND.COM I JANUARY 22, 2024

Lauren Clark, 33, holds twins Oakley and Riley, 6 months, while Raegan, 3, and Nolan, 2, (left) play in their Brunswick home. Clark made the decision not to return to work full-time after having twins. | GRACE MCCONNELL

THE CHILD CARE CHALLENGE The price tag for day care is comparable to college tuition, and the state is faltering under the cost pressure. When child care systems fail, the economy suffers. More than one-third of Cuyahoga County parents with children younger than 5 exited the labor market, were demoted or experienced another work disruption because of child care issues. Such events ripple throughout the economy for years. PAGE 8

Melt Bar and Grilled ‘We have gotten a lot done’ is fighting to survive Marking first year, county executive talks Justice Center revamp, new jail

By Kim Palmer

By Jeremy Nobile

There was a time when the public’s appetite for Melt Bar and Grilled simply could not be sated.

But that was years ago now, before the rise of an economy-wracking health crisis, rampant inflation and a giant swing in consumer habits.

It’s a vastly different time for Melt, whose celebrated owner, Matt Fish, once envisioned operating a network of 25 restaurants across the Midwest.

With profitability now a struggle, the company is focused no longer on growth and expansion but mere survival.

See MELT on Page 17

VOL. 45, NO. 3 l COPYRIGHT 2024 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

Cuyahoga County Executive Chris Ronayne took office last year. | KEN BLAZE

Ronayne discusses levies, TIFs and political relationships. PAGE 16

P001_CL_20240122.indd 1

Cuyahoga County Executive Chris Ronayne is incapable of walking into a room without shaking someone’s hand.

Ronayne spent the first 15 minutes of his interview with Crain’s greeting residents coming into Cuyahoga County’s headquarters on the corner of Prospect Avenue and East Ninth, introducing himself to new workers at the front desk and talking with staff in the halls and elevator.

“You know, It’s National Law Enforcement Appreciation Day today,” Ronayne explains as he shakes the hand of a plainclothes member of the County Sheriff 's department.

See EXECUTIVE on Page 16

1/19/24 2:39 PM

By Scott Suttell

BLOOMBERG

Warren Buffett’s Berkshire Hathaway Inc. has bought the remaining 20% of the Haslam family’s Pilot Corp. truck stop business that it didn’t already own.

Berkshire Hathaway, headquartered in Omaha, Nebraska, now owns 100% of Knoxville, Tennessee-based Pilot Travel Centers, the companies said in separate announcements on Tuesday, Jan. 16. Financial terms weren’t disclosed.

The deal concludes an eventful period for the two companies.

On Jan. 8, Berkshire Hathaway and Pilot settled a lawsuit that centered around valuation of the remaining stake in Pilot. The settlement came on the eve of a trial in which Berkshire — which in deals in 2017 and 2023 acquired an 80% stake in Pilot for more than $10 billion from billionaire Cleveland Browns owner Jimmy Haslam — was accused of improperly changing the accounting methods to short-charge the Haslam family out of their remaining 20%.

At the time of the settlement, Bloomberg noted that the deal was “likely to clear the way for Buffett to purchase the remaining 20% of Pilot from Haslam (later in January) under terms of the original acquisition.”

Both sides have dismissed all legal claims against each other.

CNBC reported that Berkshire

Hathaway in a regulatory filing last year listed the Haslams’ noncontrolling interest in Pilot Travel Centers at a value of $3.37 billion.

The sale of the final 20% stake marks the end of a long era for Pilot, which was founded in 1958 in Gate City, Virginia, by Jim Haslam II. The company grew to the point where today, it’s the largest operator of travel centers in North America, with more than 750 locations across 44 states and six Canadian provinces. Pilot says it sells about 14 billion gallons of fuel a year and about $3 billion in food and merchandise.

Jimmy Haslam, CEO and chairman of Pilot Corp., said in a statement, “As a family business, it is humbling to think of all of the team members who have been a part of Pilot Flying J, and we are beyond grateful for their commitment and contributions over the years.

“We also have profound appreciation for all of the guests, professional drivers, and trucking companies who have supported Pilot Flying J as they have been a key part of the evolution and growth of this dynamic industry over the last six decades. We will always consider the Pilot Flying J team as family, and we wish them success as they continue to develop the best travel center network in North America and keep America moving.”

BLOOMBERG

Berkshire Hathaway buys remaining 20% stake in Pilot Travel Centers

Boomers dominate large-home market, especially in Cleveland Millennials with kids own only 14.2% of big houses, Redfin report finds

By Scott Suttell

Empty-nest baby boomers own more than 28% of large U.S. homes, about twice the percentage of such homes owned by millennials with kids, a new Redfin report finds. And Cleveland is one of the most boomer-dominated markets.

Redfin, a technology-driven real estate brokerage, reported that boomers without kids at home own 28.2% of U.S. homes that have three or more bedrooms. Millennials with kids, meanwhile, own 14.2% of such homes.

Underscoring boomers’ dominance in large-home ownership, Redfin found that another 7.5% of the country’s large homes are owned by boomers with households of three adults or more — a category largely comprising adult children living with their boomer parents.

Redfin said the report draws on 2022 Census data breaking down the share of three-bedroom-plus homes owned and occupied by each generation, by

household type and size. It defined “empty nesters” as households headed by baby boomers with 1-2 adults living in the home. Redfin noted that while boomers dominate the largehome market, millennials make up the largest share of any generation, at 28%. They’re followed by boomers (27%), Gen Xers (25%) and Gen Zers (12%).

The report found that empty nesters “take up at least 20% of large homes everywhere in the U.S.,” but their ranks are strongest “in relatively affordable Rust Belt and southern metros.”

For instance, boomers with one or two people in the household take up roughly one-third of three-bedroom-plus homes in Pittsburgh (32.1%), Birmingham (31.1%) and Cleveland (30.8%), the highest shares in the nation.

Rounding out the top five are Buffalo (30.5%) and Virginia Beach. Demographics to some extent explain these numbers, as in most of those markets, boomers make up larger percentages of the population than in the nation as a whole.

In Cleveland, Redfin found, millennials with kids make up just 12.9% of owners of large homes, even smaller than the national percentage.

Redfin said the report underscores changes in the housing market. Empty-nesters “take up a lot of large homes because affordability was better when they were young, and there’s no financial incentive to sell now,” the firm noted. Many boomers “own their homes free and clear, and most who have a mortgage have a low rate.”

As a result, “There’s unlikely to be a flood of large homes hitting the market anytime soon,” said Redfin senior economist Sheharyar Bokhari in a statement. “Logically, empty nesters are the most likely group to sell big homes and downsize: They no longer have children living at home and don’t need as much space. The problem for younger families who wish their parents’ generation would list their big homes: Boomers don’t have much motivation to sell, financially or otherwise.”

Court rules state can freeze former utility regulator’s assets Sam Randazzo is accused of accepting $4.3 million from FirstEnergy Corp.

By Kim Palmer

Ohio’s highest court ruled the state can freeze the assets of Sam Randazzo, the former Public Utilities Commission of Ohio chairman, as part of an ongoing federal public corruption case.

The Supreme Court of Ohio reversed a court of appeals ruling and reinstated a Franklin County Common Pleas Court order to pre-

vent Randazzo, who is accused of accepting $4.3 million from FirstEnergy Corp. while he oversaw Ohio’s energy policy, from moving money out of the accounts.

Ohio Attorney General Dave Yost’s office filed a civil lawsuit against Akron-based FirstEnergy, and eventually Randazzo, for violating the Ohio Corrupt Practices Act. The move came after a 2020 deferred prosecution agreement made by the company with the U.S. Attorney’s Office that implicated Randazzo.

The asset freeze followed a raid

by FBI agents on Randazzo’s home that triggered him to make a zero-dollar transfer of property valued at more than $500,000 to his son, and to sell two Florida properties for $4 million and two Ohio properties for about $800,000.

The ruling is in line with the Columbus-based Franklin County trial court decision. That ruling sided with the AG’s office that there was a “present danger” Randazzo would transfer assets to make them unreachable to the state if a judgment was won against him.

Randazzo appealed the freeze to the Tenth District appellate court,

which vacated the decision, citing, among other points, that the state had failed to meet certain filing requirements.

The civil lawsuit is part of a larger scandal around the passing of Ohio House Bill 6.

The bill that raised utility prices to pay for a $1 billion bailout for a nuclear facility subsequently ended in two guilty verdicts against former Republican operative Matt Borges and former Ohio House Speaker Larry Householder.

In June, ex-lobbyist Borges was sentenced to five years in federal prison for participating in a racke-

teering conspiracy. Householder received a sentence of 20 years for his role in a scheme to pass the bill in exchange for a total of $61 million in bribes.

A trial that ended in March found Borges and Householder guilty of violating the racketeering statute.

FirstEnergy signed a deferred prosecution settlement in July 2021, agreeing to pay a $230 million penalty for conspiring to bribe public officials and others.

The Supreme Court unanimously reversed the appellate court decision and reinstated the orders of the trial court.

2 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P002_CL_20240122.indd 2

1/19/24 2:05 PM

Group asks state to prioritize six shovel-ready projects

By Paige Bennett

A sizable group of Cuyahoga County funders is asking the Ohio legislature to prioritize six shovel-ready projects led by health and human service nonprofits in the state’s upcoming capital budget.

The Greater Cleveland Funders Collaborative (GCFC), a private-public partnership between more than 50 foundations, nonprofits and governments focused on post-pandemic recovery of the region’s nonprofit sector, has called on the Ohio General Assembly to support projects — including a workforce training center, behavioral health treatment center and facility renovations and repairs — in the state’s capital budget for the 2025-26 fiscal year.

The GCFC-recommended projects are being spearheaded

by The Centers for Families and Children and Cleveland Christian Home, Hospice of the Western Reserve, Lutheran Metropolitan Ministry, Magnolia Clubhouse, OhioGuidestone and YWCA Greater Cleveland.

It is the first time since the GCFC’s formation in 2021 that it has asked the state to prioritize specific projects in the capital budget.

Ohio’s biennial capital budget makes appropriations for state agency infrastructure costs and community projects, which can be used to support the “acquisition, construction, reconstruction, rehabilitation, remodeling, renovation, enlargement, improvement, equipping, and furnishing of capital facilities,” according to the Ohio Revised Code. Organizations seeking funds had until Dec. 18, 2023, to submit their proposals to the Ohio House.

GCFC asked local nonprofits to send their proposals to the collaborative, which assessed them based on the scope of the work and the long- and short-term benefits to the county. Maryam Kiefer, director of public policy at United Way of Greater Cleveland, said GCFC received a total of eight requests, six of which met the collaborative’s criteria.

“We really wanted to highlight these important nonprofit projects taking place in Cuyahoga County and really encourage the legislature to fund these programs, especially because, as funders, all of us at some point in time or currently are funding these programs,” Kiefer said.

GCFC developed out of the work of the Greater Cleveland COVID-19 Rapid Response Fund, which delivered more than $19 million to health and human service nonprofits at the start of the pandemic. Participating organizations include groups such as the Cleveland Foundation, Mt. Sinai Health Care Foundation, Cuyahoga County and the George Gund Foundation.

Although the collaborative is no longer doling out emergency funding, it wanted to stay together to focus on nonprofit resiliency in a

post-pandemic world, Kiefer said.

During the pandemic, the Greater Cleveland COVID-19 Rapid Response Fund gave money to nonprofits in Cuyahoga, Lake and Geauga counties. GCFC opted to focus its attention on capital projects at Cuyahoga County organizations that address care and services for children, adults, working families and those seeking employment, housing or behavioral services. Kiefer said Cuyahoga nonprofits typically face tougher competition for project dollars than those in rural counties.

GCFC also decided to look only at organizations seeking funds from the mental health and addiction, developmental disabilities and higher education funds of the state’s capital budget.

“That’s generally where your health and human services organizations are competing for dollars,” Kiefer said. “We weren’t really looking at the arts and cultural institutions. They generally are pretty robust in their advocacy efforts. We really wanted to lend our weight to those organizations that might not have the support or lobbying teams have access to or have historical funding in kind of every capital budget cycle.”

When GCFC put out the request for proposals, it found that a number of nonprofits were unaware of the funding opportunities available in the capital budget, Kiefer said. GCFC hopes to educate these organizations on funding sources and is hosting a training session for grantee partners later this month to teach them about the state’s capital and operating budget processes, federal appropriations and earmarks and how they can best position themselves to apply for and receive funding in the future.

Here’s a look at the organizations and their requests: Organization: Magnolia Clubhouse Services: Operates using a clubhouse model to provide individuals with mental illness opportunities for friendship, employment, housing, education and access to medical and psychiatric services.

Project: Lori D’Angelo, executive director of Magnolia Clubhouse, said the nonprofit asked the state for $1 million to help fund a $4.5 million project that would involve joining Magnolia’s two buildings in University Circle. D’Angelo said the new space would allow Magnolia to increase program capacity. It would include an elevator for ADA accessibility and a flexible meeting space that the organization could use to educate groups on the clubhouse model. Magnolia Clubhouse has already raised $1.5 million toward the project. It previously received $250,000 in state capital funds for an earlier phase of site development.

“It’s always a challenge to raise private funding and (state capital funds) are really the only other source,” D’Angelo said. “I think we really rely on support from the government to assist nonprofits

ceived $700,000 in the fiscal year 2023-24 capital budget for the first phase of the project.

Magnolia Clubhouse, which provides people with mental illness opportunities for friendship, employment, housing, education and access to medical and psychiatric services, has asked for funding in the state capital budget. | CONTRIBUTED

in meeting their mission, expanding their capacity.”

Organization: OhioGuidestone Services: Provides mental health, substance use disorder, family and foster care, juvenile justice, residential treatment, home-based counseling and more services.

Project: The organization plans to transform an existing property in Olmsted Falls called Marston Farms into a behavioral health residential treatment center. Mary Stiles, chief strategy and legal officer for OhioGuidestone, said the organization has owned the property for some time. It features a facility, farmhouse, outdoor chapel area and ropes course. OhioGuidestone has requested $341,000 from the state to help support the project, which will cost around $682,000 in total.

Stiles said a mix of grant funds and private funding through match granting will pay for the rest.

“We use (the property) for things currently, but not really in its full capacity,” she said. “The group home space has not been used for many years, and so we really wanted to be creative about how we could use that to meet needs in the community.”

Organization: Hospice of the Western Reserve Services: Provides palliative and end-of-life care, caregiver support and bereavement services.

Project: The organization plans to include a roughly $2 million Center for Community Engagement and Hospice Care as part of a larger project to construct a new inpatient unit at the property on Lake Erie. The space will be used for community education and grief work for families after they have lost a loved one, said William Finn, president and chief executive officer at the Hospice of the Western Reserve. He said the hope is to create a “transformational” resource for Cleveland’s Collinwood neighborhood.

“It’s a flexible space, so we’ll be able to have small groups, we’ll be able to have a very large meeting space as well,” Finn said. “And the other thing that’s going to be unique about the property is that we’re working with the county and the waterfront commission

to look at how we can create access to the waterfront along our property.”

If funding falls in place, the goal is for the new inpatient unit and community engagement center to be operational by fall 2025, Finn said.

The larger project cost is closer to $23 million, and most of that is being raised by the Hospice of the Western Reserve.

Organization: Cleveland Christian Home Services: Provides traditional and intensive care residential treatment for children and youth, and a resource for families facing disruption.

Project: The organization has requested $5 million from the state to assist with the construction of a new 24/7 child wellness welcome center, the renovation of the more than 60-year-old kitchen and cafeteria in the current building and the installation of an elevator to ensure ADA accessibility. It’s part of the larger ongoing $14 million renovation of the Cleveland Christian Home campus, which will provide 58 specialized beds for emergency child placement and residential treatment. Cleveland Christian Home recently completed a $3 million renovation of three residential units and is in the process of completing another $3 million renovation of the remaining units, according to the budget request. It re-

Organization: Lutheran Metropolitan Ministry Services: Serves and advocates for youth, individuals involved in the criminal justice system, vulnerable and people who are homeless and offers workforce development services.

Project: The organization intends to convert a warehouse facility across the street from its main headquarters in Cleveland into a workforce training center to house the new building maintenance and repair program. It will also feature a storefront café that builds upon the organization’s existing culinary training program. Maria Foschia, the organization’s CEO, said the program will equip individuals with necessary skills to fill critical roles in different trades. The warehouse rehabilitation will cost a total of $3.1 million. Lutheran Metropolitan Ministry requested $750,000 from the state and is actively raising funds among private donors and foundation partners, with the goal to raise at least $1.1 million in private funding, said Marcella Brown, vice president of development and communications.

Organization: YWCA Cleveland Services: Offers direct services, programming and advocacy to support marginalized individuals and families, particularly women and girls of color, while working to challenge structural barriers to equity.

Project: The YWCA requested $750,000 in capital funds to support repairs and upgrades to the heating ventilation and air conditioning system at 4019 Prospect Ave. The building is home to programs that support young adults, children and families. It also contains 23 apartments as part of a supportive housing project that helps young adults who have experienced homelessness, been in the foster care system and have a diagnosed disability.

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 3

P003_CL_20240122.indd 3

1/19/24 2:06 PM

Struggling Lake Erie College strikes deal with bondholders

By Amanda Albright and Nic Querolo, Bloomberg

EASY, BREEZY

Lake Erie College, a small private school in Lake County, entered into a forbearance agreement with bondholders after the school didn’t meet certain covenants it agreed to as part of a debt sale.

CALL CBS FOR YOUR NEXT LOAN Providing Commercial Real Estate Loans Throughout Northeast Ohio and 15 Other States

PERSONALIZED SERVICE Loans up to $30 Million • No Prepayment Penalties Investment & Owner-Occupied Commercial Real Estate

Straight Talk. Smart Deals.® CONTACT JONATHAN A. MOKRI 440.526.8700 • jmokri@cbscuso.com www.cbscuso.com

FOR LEASE

seven days of cash-on-hand in fiscal 2023, while it was required to have 25 days as part of the bond deal.

The school disclosed in the filing that it entered into a forbearance agreement with the trustee for bondholders, U.S. Bank. As part of forbearance agreements, investors agree not to take certain actions against borrowers, such as demanding immediate repayment on debt if they have that right.

That gives stressed borrowers more time to shore up their finances, though the terms of this specific agreement haven’t yet been disclosed.

A spokesperson for the trustee, U.S. Bank, declined to comment.

A spokesperson for the college did not respond to an email and phone call requesting comment.

The college is the latest to encounter stress in higher education as rising costs and competition puts pressure on smaller colleges.

Fitch Ratings said it expects

The Painesville-based institution is the latest small college to see its financial struggles extend into the muni-bond market.

The Painesville-based institution, which has just over 700 undergraduate students, is the latest small college to see its financial struggles extend into the muni-bond market. It sold about $30 million of debt in 2019 in part to finance a barn and other projects at its 86-acre equestrian center.

Lake Erie College didn’t meet a required debt service coverage ratio, which is considered an event of default, according to a regulatory filing dated Monday, Jan. 15. The school also only had

pressure to intensify for smaller, less-selective institutions in 2024, given demographic trends and eroding sentiment on college affordability, according to a December note.

Lake Erie College, located about 30 miles from Cleveland, was founded in the mid-19th century as a seminary for women providing a “thorough and complete female education,” according to its website. It became co-educational in 1985.

Virtually all of the debt that it issued more than four years ago is still outstanding, according to data compiled by Bloomberg.

The bonds were sold through the Public Finance Authority, which issues municipal debt for riskier projects around the U.S. Part of the proceeds were used for a barn, arena and other facilities at the school’s equestrian center, which hosts the college’s equine studies department and has space for more than 90 horses.

A spokesperson for Nuveen — the largest holder of the school’s debt, according to data compiled

by Bloomberg — didn’t reply to a email or phone call requesting comment.

25,000 SF Office/Warehouse Space 17450 Engle Lake Drive Middleburg Heights, OH 44130

PROPERTY OVERVIEW •25,000 SF Total Space •4,500 SF Office Space •20,500 SF Warehouse Space •Five (5) Truck Docks •One (1) 12’ x 14’ Drive-In Door •28’ Clear Height

•50’ x 50’ Bay Spacing •ESFR Sprinkler •1200 AMP/4800 Volt/3-Phase Electric •Parking for 88 Cars •Close to Bagley Road & I-71 Interchange •Excellent Visibility from I-71

Kevin Kuczynski 216.861.5684

PLAYHOUSE SQUARE

kevinkuczynski@hannacre.com

Playhouse Square names new board chair

By Scott Suttell

The Best Employers in Ohio is a survey and awards program that honors employers in Ohio that are making their workplace great.

There’s a new board chair at Playhouse Square.

The performing arts nonprofit on Tuesday, Jan. 16, announced that Brent D. Ballard, managing partner emeritus of Calfee, Halter & Griswold LLP, has been elected chair of its board of trustees and will serve in that role through June 2027.

Ballard succeeds Amy Brady, the chief information officer at KeyBank, who chaired the Playhouse Square board from July 2019 through December 2023.

Ballard has been a Playhouse Square trustee since 2013. He has served on the Real Estate Development, Government Affairs, Nominating & Governance, and Executive committees.

Playhouse Square’s new board chair, Brent D. Ballard (right), stands with President and CEO Craig Hassall. | CONTRIBUTED

Playhouse Square president and CEO Craig Hassall said in a statement that Ballard “is knowledgeable and passionate about the city of Cleveland, and he has served the organization enthusiastically over the past decade. He is so supportive of our vision to grow Playhouse Square into one

of the world’s premier arts districts, and it is fortuitous his leadership will guide us into the future.”

Ballard said Playhouse Square is among the “cultural treasures” that “distinguishes Cleveland on the national stage as we recruit talent to come here for jobs and to raise their families.”

Playhouse Square noted in its announcement that Ballard throughout his legal career “has been a respected business and legal adviser to privately held business clients, operating as inhouse counsel to the management teams and the multi-generational family owners of those businesses.”

Ballard earned his law degree at Case Western Reserve University.

4 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P004_CL_20240122.indd 4

1/19/24 2:16 PM

GETTY IMAGES

EDITORIAL

A reset in Akron

T

his is a month for fresh starts, regardless of how your Dry January might be going.

As 2024 begins, this is particularly true in Akron, where there’s a new leader at City Hall (Mayor Shammas Malik), an incoming CEO at the city’s most important large corporation (Goodyear’s Mark Stewart, starting Jan. 29) and the prospect of a new structure (for-profit) for its primary health system, Summa Health.

That’s a lot of change, and change isn’t easy. But the stakes have rarely been higher for getting that change right.

The change envisioned at Summa, in particular, is huge.

Venture capital firm General Catalyst last week said portfolio company Health Assurance Transformation Corp., known as HATCo., signed a non-binding letter of intent to acquire Summa and convert it to for-profit status. (They still need a definitive agreement and regulatory approval for the deal to go off as planned by the end of the year.)

It’s a big transformation for Summa, a nonprofit system with three hospitals, 15 community health centers and 8,500 employees. The deal was surprising in the moment, but with a little hindsight, it’s understandable. Southfield, Michigan-based Beaumont Health in mid-2019 signed a letter of intent to acquire Summa, but it called off that deal about a year later.

That was the start of the pandemic, when everything was hard, but this deal looks better thought out.

HATCo co-founder Dr. Marc Harrison, a former high-level executive at Cleveland Clinic, told Crain’s sister publication Modern Healthcare that the firm had three deal criteria that Summa fit: “First and foremost, we were looking for leadership that was seeking change.

Second, we wanted a system that had se-

There’s a lot of change happening in Akron, and change isn’t easy. But the stakes have rarely been higher for getting that change right.

Last week’s big announcements from Goodyear and the company that intends to buy Summa stand to shape, in potentially significant ways, the administration of Malik, 32, who has been mayor since only Jan. 1.

Malik had a long period as presumptive mayor, after winning the Democratic primary in May 2023, but the new developments at Goodyear and Summa underscore how quickly circumstances can change—and how political leaders must be deft in adapting to them.

Interim Editor: Ann Dwyer (adwyer@crain.com) Managing Editor: Marcus Gilmer (marcus.gilmer@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

rious market relevance in the area they served. Third, we wanted it to be the right size—not small enough that they didn’t have all the services available but not so big that it was going to be impossible to change.”

Summa posted an operating loss of $37 million for the first nine months of 2023, up from $21 million in the like period a year ago, and its president and CEO, Dr. Cliff Deveny, described its current model as not sustainable.

That certainly appears to be the case, based on the numbers. If HATCo moves Summa to more stable financial ground, that’s a plus. It’s also important, though, to keep in mind the special community mission of a local health system.

HATCo says it plans to create a community foundation after the acquisition to invest in social determinants of health across in Akron, and that the system would continue to provide charity care.

Regulators must make sure that’s the case. Akron’s primary health system must be committed to providing care to the most vulnerable members of the community.

The Goodyear CEO transition, meanwhile, came fast — faster than these changes typically happen.

CEO Richard Kramer announced in November 2023 that he would exit after 24 years at the company, and 14 in the top job. Two months later, the tiremaker named his successor — Mark Stewart —

and it announced last week that the formal succession would take place on Jan. 29.

The speed with which Goodyear made its change in the CEO suite illustrates how seriously it’s pursuing a transformation plan called “Goodyear Forward,” which is designed to generate more than $2 billion from portfolio optimization and cost cuts of $1 billion by the end of 2025.

Goodyear has been under pressure from an activist investor, Elliott Investment Management, which saw the company as being undervalued. The “Goodyear Forward” strategy is an aggressive response as the company seeks to remake itself from what Northeast Ohioans know — primarily as a tiremaker — into a tech-driven leader in areas including EVs and connected vehicles, all while increasing its focus on sustainability.

That’s a big ask. Stewart, a Stellantis veteran who also has worked for other automotive companies and Amazon, looks to have a background that’s conducive to managing a corporate giant Goodyear has 74,000 employees worldwide,at57facilitiesin23countries-through aggressive change.

The prospects of a stronger Summa and Goodyear are encouraging, for those institutions and Akron as a whole.

But be ready for bumps along the way.

These kinds of big changes are almost always harder than they look.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to ClevEdit@crain.com.

Please include a telephone number for verification purposes.

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 5

P005_CL_20240122.indd 5

1/19/24 2:24 PM

acc eve bac any bein the bec play com

NIL deals, transfer portal create havoc and opportunities for college football programs Fans who donate to the Buckeye Club can get the right to purchase season tickets for Ohio State football. | GETTY IMAGES

By Joe Scalzo

For Ohio State football fans, one of the biggest questions from the last three years is: How can the Buckeyes keep beating Michigan on signing day, and losing on game day?

“I point this out to Buckeye fans — they’re beating us with players we didn’t want,” said Mark Porter, the founder of the high school football recruiting website ScoutingOhio.com.

To Porter, the reason is simple: Even the best coaches and recruiters get it wrong half the time, meaning programs that can keep the recruiting battle close (like Michigan) can close the gap once those recruits get on campus.

“On signing day, you’re always so proud of all these five-stars (recruits), but the reality is, half the kids in your recruiting class are technically going to be misses,” said Porter, who founded his site in 2005.

“All this early evaluation on kids who aren’t done developing is wrong. You know the math is wrong, but you’re doing the best you can with the information you have.

That’s true of the NFL, too. While college coaches have the difficult task of projecting what a 16- or 17-year-old will become when he’s 22, NFL scouts (seemingly) have the easier task of projecting which 22-year-olds will become great professional players.

“And yet in the first round of the NFL draft, 10 or 15 of those guys don’t live up to the billing,” Porter said.

While Ohio State isn’t exactly underachieving — remember, the Buckeyes were a last-second field goal away from beating Georgia last year, a win that almost certainly would have led to a national championship a week later — Michigan has consistently overachieved over the last three years, recruiting three- and four-star high school players who enter campus a little undersized or underdeveloped, then turning them into NFL-caliber players.

“The thing is, there’s really not that much of a difference between five-stars and four-stars,” Porter said. “People act like there’s some cutoff between these guys, but they’re not that much worse. In my reports, you’ll find on a lot of my second-tier guys I write things like, ‘Major upside if he can get stronger or meaner.’ Or maybe he’s a receiver who played in an offense that ran the ball every play.

“The bottom line is, we’re just guessing today (on high school recruits) and there’s no way that list is going to be exactly right in five years.”

Porter, who played tight end at Kent State in the 1990s and now lives in Canfield, runs a free recruiting service that follows all NCAA bylaws, policies and procedures. He makes his money by evaluating players (on film and in person) and selling that information to 80 programs at all levels of college football.

Porter recently spoke with Crain’s Cleveland about how two big issues — Name, Image and Likeness (NIL) and the transfer portal — are affecting college football, and what the best programs (at all levels) are doing to take advantage of them.

Let’s start with high school recruiting in particular in football. How has the transfer portal affected high school players? Are there fewer Division I scholarships available?

Are there fewer opportunities to play right away?

The COVID bubble, I guess you would call it, gave college students an extra year, so you started seeing sixth-year seniors and more than 85 people on scholarships for a little period there. That really kept a lot of teams top-heavy and it affected the numbers, and that (negatively) affected a number of kids coming out of high school.

And the transfer portal pretty much hit at the same time, so instead of buying an unknown high school product, colleges were buying a “known” product.

If you look at the number of Division I kids by year in Ohio in the last 10-12 years, you could see some (recent declines). This seems like the first year where it’s kind of getting back to the normal numbers, where there’s about 120 Division I kids in Ohio.

But at the end of the day, it’s one of these things where Ohio State loses their quarterback (Kyle McCord) to Syracuse and when I evaluate (incoming OSU quarterback transfer) Will Howard, he looks better than anyone they’ve ever had. So if you’re Kansas State, you’ve been developing this stud quarterback.

You’ve done all this prep to get him ready and then, before his senior year, he says, “See you later.” Syracuse was in the same situation and they get Kyle McCord from Ohio State. So it’s like a game of musical chairs.

Everyone is running around and they all get their chair back, but they’re in a different spot and it might be more accurate to their skill level at the end of the day.

But it is nuts. It really is.

We look at those transfer success stories like Joe Burrow and Michael Penix and Kenneth Walker, but it seems like there are just as many instances where guys transfer and they don’t play at the new school. Maybe they didn’t play at their last school and they don’t play at the new one, or they jump up a level and they don’t play at the new school.

So what have you seen when you look at the transfer portal (results)? Is it a mixed bag?

Yeah. You’ve got the guys who, as soon as they enter the transfer portal, they’re scooped up. And they actually have relatives who can tell them, “As soon as you go, you have a free ride here.

Here’s what they’ll give you.”

And it’s all back-channeled or through NIL agents. But then there are other kids who are either dreamers or they’re delusional.

They think, “I had a great year here” or “I was a five-star and I haven’t played here, but people will remember that I was a fivestar” and they may not have an accurate evaluation of who they are. I wouldn’t jump in that portal unless someone told me, “Look, there’s $50,000 and a full ride at a new school.” You get in the portal and the next day you’re there. Teams aren’t supposed to be doing that, but it’s like tampering in the NFL or the NBA. It happens. But the delusional kid, you can read between the lines

where he thinks he can upgrade himself, but he was in a good situation and should have chilled out.

Someone told me today, “You ain’t getting a kid to sit for more than 18 months right now. If he’s a backup for 18 months, he’s going somewhere else.” Most of them will give you that one year of being a backup, but nobody’s waiting until their junior or senior year to get on the field anymore.

And, honestly, if you’re a MAC (Mid-American Conference) kid, go play at a Division II school. If you want to go to the NFL, or go to the next level, you’ve got to go develop. And it doesn’t matter if it’s at Mount Union or Ashland or Princeton — schools that you wouldn’t think have NFL written on them. You have no chance if you’re a backup. Kyle McCord’s situation is, “OK, if I stay at Ohio State and I don’t get the job, I’m not going in the NFL draft this year, but if I’m at Syracuse and I go 7-6 and still develop, I’m going in the draft.” Ohio State has that problem where all their backups know they can go play a zillion other places. So they’re really having trouble keeping their third receiver or their fifth receiver or fourth linebacker.

So when you’re asking, “Is it a good idea to transfer?” it just depends, right? Sometimes it’s good to move up, sometimes it’s good to move down.

The stigma (of transferring) is gone. We grew up in an era where, if anyone sat out a year (because of the former transfer rules), you think, “They must have been really disgruntled” to take that kind of a hit. But now, it’s almost

6 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P006_P007_CL_20240122.indd 6

1/18/24 1:14 PM

Wil ple wan goi ear pro O for t just who this to w and Ohi coa him to fo wei team wan min Stat they The You into lead guy with it’ll acc “It’s it.”

Wil like NFL In run The say, bala the all m com 49e or ( and my mon

s

e

ed

u e e’s

f r s nior e.

d, If o go if

u en f s io m

accepted as free agency. You can even enter the portal and come back, as long as you didn’t burn any bridges. I think the stigma of being a bad person and going in the portal isn’t necessarily there, because there are a lot of prize players out there. A lot of hot commodities.

Will Howard is a good example, because if he’s saying, “I want to go to the NFL, so I’m going to step up a level and earn more NIL money in the process,” it makes sense.

Oh, 100%. You just feel bad for the Kansas State coaches. I just talked to this college coach who was like, “I’m going to get this great prospect, I’m going to work with him for two years and then he’s going to end up at Ohio State or wherever and their coach is going to be sitting with him on draft day and he’s going to forget about me.” It’s kind of a weird feeling. It’s turned a lot of teams into a JV team and no one wants to admit that. You’re the minor leagues. Like Youngstown State (YSU), how many kids did they have go into the portal?

They had some really good ones.

You put all your love and care into that kid — a captain, a team leader — and it’s like, “See you guys!” There’s a weird feeling with that. And I don’t know if it’ll go away, where you just accept it like we do in the NFL. “It’s free agency, guys. Get over it.”

Will that lead to more parity, like free agency does in the NFL? In the NFL, all 32 owners are running teams to make money.

They all meet every year and say, “How can we keep this all balanced, so we’re all making the same TV money and we’re all making money?” And along comes someone like (former 49ers owner) Eddie DeBartolo or (Cowboys owner) Jerry Jones and they say, “I’m going to use my oil money or my real estate money and I’m going to lose

$10 million to $20 million to win a Super Bowl.” And it flipped the whole league upside down.

And there was a salary cap. And if you follow that trajectory, that’s kind of what’s going on right now, where a lot of players are getting bought out of high school with NIL money and the big schools either can’t afford to buy all the five stars, or places like Tennessee and Miami (Florida) and Maryland, which has Under Armour, or Oregon, which has Nike, they’re not going to just let Ohio State and Alabama and Georgia take all the good players.

So, I think as those top-tier players dilute, and they all spread out a little more, you’re going to see these teams that are two or three possessions better than everybody having to fight to win games. Because the thing is, there’s only 32 five-stars, because there’s 32 picks in the draft and they kind of mimic that. Those top 10 to 20 guys, you and I could pick those guys and coach them. There’s not many busts up there. So that’s where everyone is spending their money. It’s not on four-stars or three-stars. Those guys are just happy getting scholarships. So, yeah, there’s parity coming, until they somehow cap this. Right now it’s the Wild Wild West of who wants to spend money.

But I don’t know if the (college) donors will have the same attitude as NFL owners, where you say, “Here’s $120 million, because that’s what the cap is.

Spend it however you want, and if $40 million gets set on fire because of injuries or kids doing stupid things, that’s cool. I’m good with it.” But you kind of have to have that mentality. Will these college donors have that same mentality?

I know I’m going on a rant here a little bit, but if you’re Ohio State or Michigan, do you have a salary cap yet? You keep asking fans and donors to keep donating constantly, so it’s almost like a constant

political campaign. Every time you lose a player or you need a player, you’re emailing the fan base, “Hey, doesn’t it make you mad that Michigan is going to take this guy for $100,000 more? Donate here.”

That’s kind of what’s going with those (NIL) foundations right now.

So the fans are buying the players and now if you don’t like what you buy, do you stop giving? I don’t know. It’s a new world out there.

If you’re Kent or Akron, what do you do?

You reverse it. As you lose three really good players and you’re mad about it, you go to the portal.

Alabama had, I think, nine guys in the portal and I think Ohio State was up to 15. Those guys need homes and they want to play tomorrow. You call them and sell them, saying, “There’s a starting job for you here. You’ll be a featured guy.” And they might not all be Ohio State or Alabama guys. They might be Pitt players or Michigan State or Indiana.

Kids that were originally from your hometown, kids that grew up in Akron or Cleveland went far away. They’ll come back home.

So you reverse build it that way.

These kids need you. Not all of them can go a little bit below Ohio State. And those (MAC) schools have NIL. Even YSU has NIL. It’s not tons of money, but you might be able to get an apartment by yourself instead of having a roommate.

At one point, you had to sit out a year (of college athletics) if you transferred once. Then it became where you had to sit out a year if you transferred

twice. What happens when you don’t ever have to sit out a year? And obviously there have been kids who got exceptions and didn’t have to sit after multiple transfers.

That’s basically where it’s at.

Once you go once, twice, it would be hard to go again without there being some sort of crisis.

But shame on you at that point.

Find traction somewhere. Find someone to like you. And there are situations that pop up where there’s a stud at your position and you’re a stud too. It’s a 60-40 (proposition) and they have to make a choice. If you sit on the bench, nobody is going to know about you. But just like Akron kids are going to Mount Union or Akron to Ashland, Ashland is producing a couple big players and they’re losing them to the MAC. You look at the (Division II) all-conference teams for positions you need. If you need a tight end, and they have the best tight end in Division II football, you say, “Let’s get him.”

It’s funny because a year or two ago, we were saying, “Is this going to happen?” And now we’re at the point where it’s happening.

And there was a carefulness to it last year, where the coaches were like, “Are we really doing this to each other?” Because these guys are friends. And Ohio State would always help those smaller schools, letting them at their camps. But now it’s like, “By the way, your receiver is really good. He’s coming here to play special teams. Sorry!”

It’s really happening. This year, the gloves are off a little more. On signing day, the last-minute deals

for kids were crazy. It was literally like, “This kid is signing with Miami, but Georgia just offered an extra $200,000. And Alabama just upped that to $300,000. And Ohio State came back over the top with $500,000.” All throughout the day, there was $50,000 more here or a truck or an apartment or a house.

The rumor is that this quarterback coming to Ohio State is getting paid a ton, like $2 million and all the other stuff.

When it comes to high school kids, if you’re good and you have good grades, are you still fine? Or has recruiting changed even for them?

The top guys are fine. It’s the MAC area now where there’s not as much depth. A lot of teams will go into the portal before they take a MAC-type player. You better have some upside to you, where maybe you’re 6-5, 200 pounds but you’re going to be 230 someday. A lot of those MAClevel kids are going to Division II or Division III ball now, but so what? If you’re as talented as you think you are, after two years down there, you’re going to be able to transfer to that lower Big Ten school. Now you’ve got 40 or 50 catches at Division II and you’re blocking well and that tape’s out there. It’s literally one of those things where I think it will all even out in the end. As much hell as is going to happen to get it right, I think they’re going to get it right. It’s like the NFL — go into free agency if you’re thinking you’re worth the money. You might find a team willing to overpay, but for the most part, it’s going to settle.

TOLL BLENDING • FLAMMABLE BLENDS • CUSTOM LIQUIDS

TURNKEY

Construction

Real Estate

Facility & Property Management

CUSTOM BLENDING IN- HOUSE F UL L -SERVICE L AB & ON- S IT E QUAL IT Y CONT ROL

I ing t ps

Let CSI be your mixing and blending solutions for your most demanding and complex blending requirements.

Our Morehouse Cowles ViscoMAX multi-shaft mixer and 10,000-gallon stainless steel storage tanks allow CSI to produce more blends for increased demand. CSI specializes in the production of flammable products and is capable of producing a wide range of high viscosity blends from 100 to 1,000,000 CPS (centipoises).

ird r

it a st

wn. s ere, se ou

3751 JENNINGS ROAD • CLEVELAND, OHIO 44109 • 1-800-362-0693

WWW.CHEMICALSOLVENTS.COM/BLENDING

CSI also provides a wide range of commodity chemicals & solvents:

CUSTOM BLENDING • TOLL MANUFACTURING • LARGE SCALE WASTE SERVICES

st

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 7

P006_P007_CL_20240122.indd 7

1/18/24 1:15 PM

CHILD CARE

THE CHILD CARE CHALLENGE

GRACE MCCONNELL

Families, employers and caregivers grapple for creative solutions

Lauren Clark, 33, holds twins Oakley and Riley, 6 months, while Raegan, 3, and Nolan, 2, (left) play in the living room of their Brunswick home. Clark made the decision not to return to work full-time after having twins.

FORUM UNDERWRITERS

8 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P008_P009_CL_20240122.indd 8

1/18/24 1:18 PM

By Ally Marotti

L

auren Clark planned to go back to work after her third pregnancy. Between help from her mom, pre-kindergarten for her oldest and a babysitter, she and her husband could afford a patchwork of care for three kids.

Then she found out she was having twins.

Suddenly, the math did not add up.

Paying for child care for four kids would’ve taken all but a sliver of Clark’s paycheck. She opted not to return to her job as a school psychologist in Brunswick.

“My husband and I sat down and were like, ‘Let’s figure out, is it worth it or is it not?’” said Clark, 33. “We did all the numbers and calculated everything out and it was like, ‘No. There’s just no point.’ ” The price tag is comparable to college tuition, and Ohio’s child care system is faltering under the cost pressure. When child care systems fail, the economy suffers. Parents miss work or change jobs.

Some, weighing child care costs with a paycheck that seems meager amid inflation, leave the workforce completely to care for their children. More than onethird of Cuyahoga County parents with children younger than 5 exited the labor market, were demoted or experienced another work disruption because of child care issues, according to a June survey of about 400 parents from Zogby Analytics. Such events ripple throughout Northeast Ohio’s economy—and the parent’s career—for years.

Increasingly, advocates in Northeast Ohio are calling on employers to help.

Subsidizing child care for their workers or opening an on-site child care facility could act as an employee benefit, helping to retain workers and easing the burden on new parents. Increased retention can improve a company’s bottom line.

“There’s huge potential to increase profits by reducing turnover,” said Ben Friedrich, associate professor of strategy at Northwestern University’s Kellogg School of Management in Evanston, Illinois. “This is exactly one of the sources where it comes from, some of these benefits like child care subsidies. Not too many companies offer them, but this would be the business case.”

profit ReadyNation. Stopping the bleeding will require deeper investments from all levels of government, advocates say.

Ohio sits near the bottom of state rankings when it comes to the subsidies it provides to low-margin child care facilities and financially struggling parents. The Zogby Analytics study found that in Cuyahoga County, child care affordability is an issue for 55% of families and access is a challenge for 78% of families. The pandemic worsened the accessibility issue, driving day care centers out of business.

When a parent quits a job to care for a child, they lose more than just a paycheck. Gone are benefits, retirement contributions and skills. Even if the parent decides to go back to work once the child starts kindergarten, their earnings potential continues to suffer. And it disproportionately affects women.

Had Clark, the new mother of twins, returned to work full time, she’d be paying roughly $2,200 a month in child care.

Now she pays less than $400 a month.

There are other costs, such as health insurance, which the family was receiving through her job before her twins were born. Without her salary, money remains tight for the family of six. They are doing what they can to cut back. They got rid of cable, stick to a strict grocery budget and are not planning any vacations.

Clark’s school district will still allow her to come back full time if she chooses. She’d rather work part time to bring in some money and continue saving on day care.

Between her school district’s rules and the union contract there, Clark said she has not found a way to make part time workable. But she misses her job and does not want to start over somewhere new.

“I love my job. I love the people I work with,” she said. “I do miss that work-home balance, and the adult socialization.”

The price of child care The median cost to send a toddler to a child care center.

2018

Cuyahoga County $11,180

2023

Cuyahoga County $13,159

How companies can help

For many new parents in Northeast Ohio, the costs of child care have become insurmountable. The estimated median cost to send a toddler to a child care center in Cuyahoga County last year was $13,159, according to data from the U.S. Labor Department. That amounts to 16.9% of the median family’s income. It’s also a 17.7% increase from 2018. Have a second child, and add another $15,000 annually for infant care, or 19.3% of the median family’s income.

Ohio loses $3.9 billion a year in earnings, productivity and tax revenue from parents encountering child care issues, according to a recent study from the non-

$6,760

$13,160

Source: U.S. Department of Labor

Weighing the costs

The J.M. Smucker Co. is a rare example of a company that prioritizes child care benefits. The food manufacturer has seen its retention rates increase in recent years, as it has offered more perks for new parents.

Smucker employees get 12 weeks of paid leave when they become parents, in addition to any short-term disability a mother might take after birth. The company also is flexible with parents when they come back from that paid leave, allowing them to leave early or start late to accommodate child care drop-offs or pick-ups. It also added increased flexibility for all corporate employees post-pandemic, which new parents find beneficial, said Lindsey Tomaszewski, senior vice president of human resources.

The cherry on top for many parents: Smucker opened a child care facility at its Orrville campus in 2015. Bright Horizons runs the facility. Employees pay tuition for their children to attend, and Smucker subsidizes it. Company representatives declined to comment on how much Smucker spends on the facility, but said the employee retention benefits are worth the costs.

See PRESSURES on Page 12

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 9

P008_P009_CL_20240122.indd 9

1/18/24 1:19 PM

CHILD CARE | COMMENTARY

Ohio needs to do better when it comes to child care

H

UNSPLASH

Columbus area is home to 133 igh-quality child care more child care centers. Every doesn’t just lay the corner of Ohio should have groundwork for kids to enough child care centers to have a better future; it’s part of meet the needs of families, yet Ohio’s economic foundation in nearly 40% of Ohioans live in a the present. child care desert.

Our labor force is stronger One reason it’s so hard to find when parents can go to work child care providers: Elected offiknowing their kids are cared for. cials reimburse them so poorly When child care providers can Kathryn Poe for their work that they struggle to afford to hire and retain skilled is Policy stay open. Ohio has never constaff, they can keep our children Matters Ohio’s ducted a cost-of-care study, insafe and give each child the at- budget and stead setting reimbursement tention they deserve. Everyone health rates using data from a backbenefits when child care work- researcher. ward-looking survey of what proers — who are disproportionately women and disproportionately viders recently charged for services in an Black — can afford high-quality care for area. Then we reimburse publicly funded child care providers at the 35th percentile their own kids.

To get child care right, Ohio leaders — less than what’s charged by 65% of proneed to balance the needs of those three viders in the area. This is so low the Biden groups — parents, providers and work- administration mandated an increase to ers. For too long, policymakers have got- the 50th percentile. But to eliminate child ten it wrong and the littlest Ohioans suf- care deserts, we need our lawmakers to do more than the minimum and reimburse fer the consequences.

The good news is that policymakers providers at the 75th percentile.

Raising reimbursement rates could can improve Ohio’s child care system.

For example, they can make public fund- help get to the root of the problem: A ing for child care available to more fami- critical shortage of child care workers. lies. Currently, the funding is available From 2017 to 2022, the number of child only to families with very low incomes: care workers in Ohio dropped by 35.89%. $36,074 annually for a family of three. That is likely related to the shamefully But child care is unaffordable even for low wages: The median hourly wage for families in Ohio’s economic middle. The child care workers is just $13.15, too little average monthly cost for one infant’s to afford child care — or much else — for care eats up almost 17% of the typical their own kids. Raising reimbursement (median) household monthly income. rates could help address this issue, but The U.S. Department of Health and Hu- only if the increase comes with the reman Services says child care is unafford- quirement that funds primarily be used able if it costs more than 7% of a family’s to raise worker pay, cover benefits, and income. According to the Economic Pol- improve working conditions.

Ohio’s kids deserve a fix to the child icy Institute, that means child care is only affordable for the highest-paid care crisis — and our economy requires it. Lawmakers should: 12.2% of Ohio households.

Child care isn’t just hard to afford; it’s ◗ Raise eligibility for publicly funded also hard to find, especially in rural child care to 300% of the federal poverty counties. Compare the concentration of level. child care centers in the Columbus area ◗ Raise reimbursement rates to the 75th to the scarcity in southeast Ohio. Al- percentile and require the lion’s share of though Franklin County’s population is the increase go to child care workers. similar to the combined populations of ◗ Conduct a cost-of-care analysis to guide all 32 Appalachian Ohio counties, the policy decisions.

Child care remains a broken, critical market

By Shawna Rohrman, Renee Timberlake, Nancy Mendez, Katie Kelly, Michelle Rose and Tatiana Wells

C

hild care is fundamental to our economy and an important factor in companies’ ability to hire and retain staff. Parents without access to affordable care face difficult decisions like cutting work hours and leaving the workforce.

However, business leaders are too often unaware that their employees are struggling—70% of business leaders assume that their lower-paid employees are the only ones impacted by high child care costs, but 50% of the top quartile of earners have left jobs due to caretaking responsibilities, according to the Harvard Business Review.

Why do cost and availability challenges plague the child care sector?

Simply put, child care is a broken market. Teacher and staff wages make up more than half of providers’ operating costs, yet their pay is notoriously low with an average wage of $13 per hour.

Child care workers are leaving the sector, with 3,000 fewer workers in Ohio in 2022 than in 2019, according to the Bipartisan Policy Center. Raising wages either cuts into razor-thin or nonexistent profit margins or raises tuition prices, passing the cost to families’ overburdened wallets.

The U.S. Department of Health and Human Services defines affordable

child care as 7% or less of a family’s income, yet estimates show families sometimes pay as much as 40%. States offer publicly funded child care programs like vouchers or subsidies to help families manage the cost, which averages $8,000 to $10,000 annually per child. Ohio’s program has the second-lowest eligibility in the country, starting at 145% of the Federal Poverty Limit (FPL), which for a family of three is a monthly income of $2,783.

Although Ohio families may continue to receive subsidies until their incomes reach 300% FPL, their copay at higher incomes still amounts to more than 25% of their gross income. Often, Ohio parents cannot stay in the labor market without access to affordable child care options, whether they receive subsidies or not.

Subsidies challenge providers, too.

Ohio’s publicly funded child care program subsidizes parents’ costs by sending a reimbursement to the child care provider. However, Ohio’s reimbursement rate is among the lowest in the country and does not cover the cost of delivering quality services. This means the subsidy and copay together do not cover tuition, and providers are disincentivized to accept families with subsidies, drastically limiting care options for qualifying families. Ohio will increase its reimbursement rate this year, but this alone will not resolve the mutually reinforcing challenge of low wag-

10 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P010_P011_CL_20240122.indd 10

1/18/24 1:15 PM

COMMENTARY | CHILD CARE

A pro-family, pro-business case for affordable child care

es and high tuition costs.

What’s being done to address this growing crisis?

Locally, Cuyahoga County’s Universal Pre-Kindergarten (UPK) program offers funding that addresses both affordability and wages: Scholarships are available to families earning less than 400% FPL ($99,440 annually for a family of three), and quality enhancement funding is used by many UPK providers to modestly supplement staff wages.

Currently, UPK reaches more than 4,000 children at 66 providers in the county.

In addition, efforts are underway to support more early childhood workers to join and stay in the field, such as through child care worker bonuses and retention funds supported by the City of Cleveland, and scholarships for students to complete early childhood Associate degrees, supported by the Cuyahoga County Workforce Funders Group.

Federally, the 2022 CHIPS and Science Act includes a requirement that companies applying for funding exceeding $150 million must include a child care plan for employees that addresses affordability, accessibility, reliability, and quality. Additionally, the federal government has proposed a funding increase for Head Start to get teachers’ pay closer to K-12 teacher wages.

Businesses and chambers of commerce across the country are also addressing the child care crisis, which the U.S. Chamber of Commerce Foundation calls a “two-generation workforce issue… essential to supporting the workforce of today and vital to developing our workforce of tomorrow.”

Businesses can be part of the solution in several ways. Colorado’s Executives Partnering to Invest in Children (EPIC) brings business leaders together to advocate for state policy changes that support the “creation of family-friendly work environments,” and increase “access to quality, affordable early child care and education.” EPIC board members include PNC Bank’s regional president, the CEO of Mile High United Way, and a partner at Ernst & Young. They have achieved huge success — EPIC members’ action has resulted in a 50% tax credit for companies who make contributions to child care providers, and tax exemptions for companies who rent or utilize space for child care centers.

These examples illustrate that innovative solutions are possible when business leaders, child care experts and policymakers work together. Northeast Ohio has a strong foundation to build on, but we must advocate for lawmakers and business leaders to prioritize finding solutions. Our workforce and economy depend on it.

Shawna Rohrman is director of the Cuyahoga County Office of Early Childhood and Invest in Children; Renee Timberlake is director of economic mobility, United Way of Greater Cleveland; Nancy Mendez is president and CEO of Starting Point; Katie Kelly is executive director for PRE4CLE; Michelle Rose is executive director of the Cleveland-Cuyahoga Workforce Development Board; and Tatiana Wells is program director of the Early Childhood Education Program at Cuyahoga Community College.

UNSPLASH

GETTY IMAGES

I

able pay structures that allow ndividuals who commit to for profit. Equally, families navithe daily responsibility of gate their finances with similar marriage, parenting and nurrationality. turing a family contribute in The example I illustrate isn’t ways that are virtuous and vital an anomaly but rather a prevailto our society and economy. ing situation in a Midwestern Regrettably, in America, we state where the median earnfall short of effectively supportings for a family of four stands at ing these virtuous behaviors, $66,990. whether through assistance Jon Husted Relevant facts: with costly child care, pro-fami- has been Ohio’s ◗ Across 41 states, the annual ly work environments or even lieutenant tax policies. Consequently, governor since cost of child care for two chilwe’re witnessing a decline in 2019. dren in a center surpasses averbehaviors we hold as virtuous— age annual mortgage payments both birth rates and workforce participa- by up to 53%. tion rates have reached historic lows. ◗ In 32 states, the average price of infant Moreover, these deficiencies create an child care in a center surpasses annual, economic strain on marriages and the in-state university tuition by less than 1% effective upbringing of children. to over 100%.

These adverse trends are unlikely to Fortunately, I’ve encountered compashift unless both the public and private nies taking proactive measures. Another sectors acknowledge and embrace the Northeast Ohio business within the same imperative to support working families. community offers an on-site child care Recently, I visited a growing business facility. Parents drop off their children at in Northeast Ohio that expressed frustra- the start of their shift and pick them up tion in recruiting adequate personnel. I afterward, benefiting from convenient, asked about their wage structure. The high-quality child care. This approach base pay stood at $21 per hour, amount- not only ensures peace of mind about ing to $43,680 annually at 40 hours per their child’s well-being, but also contribweek, complemented by health insur- utes to improved workforce recruitment ance and some 401k benefits. For a and retention for the business. household with both parents employed, Figuring out how to pool private and this equates to a combined income of public resources to do more employ$87,360 annually before taxes. er-based child care within a community However, let’s confront reality. On av- would make work and life there more inerage, child care for two children would viting, and it seems like a great project cost this family between $20,000 and for local economic developers and the $25,000 annually in after-tax income. Chambers of Commerce.

Consequently, the actual earnings for eiWhile many companies provide flexither parent after child care and taxes ble options like flextime or remote work alone amount to approximately $20,000 for parents, numerous modest-wage jobs annually, slightly below minimum wage. in sectors like manufacturing and healthAt this juncture, it’s understandable why care aren’t conducive to such policies. this couple might opt for one parent to Ohio has increased the eligibility threshstay home, managing the household and old for child care vouchers from 130% to caring for the children.

145% of poverty, extending subsidized We lose people from the workforce child care on a sliding scale up to 300% when they lose the economic incentive once a child qualifies. There should be to work. strong consideration by the general assemIt’s important to highlight the distor- bly to expand entry-level eligibility and tion in federal policy in this domain: if provide more generous support for qualithe same couple were to divorce, the par- fying individuals. This approach aligns ent responsible for the children could with pro-business and pro-family goals. qualify for subsidized child care and othMoreover, we should halt the taxation er public benefits. Conversely, the feder- of working families on their child care al policy offers no assistance if they re- expenses and consider taking a step furmain married. ther by extending it into a tax credit.

Certainly, businesses face competitive If we stack the deck against working pricing pressures, prioritize costs, and families, we shouldn’t be surprised if we make judicious decisions about afford- have fewer of them.

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 11

P010_P011_CL_20240122.indd 11

1/18/24 1:15 PM

CHILD CARE

PRESSURES From Page 9

Turnover, or the percentage of employees leaving their jobs month to month, is down in the single digits, Tomaszewski said. She declined to disclose exact figures, but said the turnover percentage was double digits pre-pandemic. Supporting parents through a time that “is ultimately a blip on the radar screen” in a worker’s career helps drive retention, particularly among female staffers, she said.

“How (employees) feel on the other side of an experience like that really helps us to drive even greater tenure and retention throughout the organization,” she said.

Cristina Zielinski has worked for Smucker for about 10 years. She sent her now 4-year-old son, Pete, to day care on Smucker’s campus for several months after returning to the office post-COVID closures. Having her son so close helped ease the logistical burden many parents face in the sprawling suburban Cleveland landscape. The family lives about 45 minutes away from Smucker’s Orrville campus. Sending a child to day care near home instead of work means a parent cannot respond quickly if needed.

J.M. SMUCKER CO.

A boost to the workforce

The J.M. Smucker Co. has a child care facility at its Orrville campus. Employees pay tuition for their children to attend, and Smucker subsidizes it.

treat at everyone’s desks at Halloween,” Zielinski said. “They just try to really connect, ‘Mommy and Daddy work over here and they’re here and they’re going to come get you in the afternoons.’”

Experts say making child care more affordable and easier to access could help lower barriers to employment, creating a boost the Northeast Ohio workforce needs. The Cleveland-Elyria metro area has not recovered from the job losses it suffered during the pandemic, according to an analysis from nonprofit think tank

“We have some work to do to convince employers that child care is an issue.”

— Renee Timberlake, director of economic mobility at United Way of Greater Cleveland

J.M. SMUCKER CO.

Not to mention, having her son nearby during the workday was delightful, Zielinski said. She could go have lunch with him or put him down for a nap. The day care also brings the kids into the office to interact with employees.

“The kids will come over and trick or

Policy Matters Ohio. The area’s job count was 2.3% lower in July 2023 than in February 2020. Other Northeast Ohio metro areas, including Mansfield, Akron, Canton and Youngstown, also remain in the red.

It's not that people don’t want to work, said Renee Timberlake, director of economic mobility at United Way of Greater Cleveland. Rather, hurdles exist that are keeping people from working. Child care is one of those hurdles. Almost half of parents who responded to the Zogby Analytics survey reported that inadequate child care impaired their career options.

“We have some work to do to convince employers that child care is an issue,” Timberlake said.

Exploring solutions Not every company will be able to afford to open a day care at the office. There are other solutions. The state of Vermont recently passed a law that will require employers to pay a 0.44% payroll tax on all employee wages. The money will be invested in Vermont’s child care system.

Some form of corporate support could be the lifeline many Ohio child care providers are looking for after the pandemic.

Policy Matters Ohio estimates that hundreds of day care facilities in the state have shuttered since the pandemic hit.

That means there are fewer available day care spots for children. The number of workers in the industry has also depleted. In 2019, Ohio had 37 children 5 and younger for every child care worker. By 2022, that ratio increased to 51 to one.

The YMCA of Greater Cleveland is betting on corporate partners to help pull it out of a pandemic-induced rut.

Like all child care facilities, the YMCA was operating on thin margins before COVID ravaged its attendance and staff counts. More than half of Ohio’s roughly 8,400 non-school-based child care providers have agreements with the state to receive funding, according to the Policy Matters Ohio think tank. Many also receive federal funding, all of which means they must operate within a strict set of rules or they won’t get paid.

Though Cleveland-area child care workers make an average of $13.88 an hour, providers struggle to raise wages due to their strict funding model. Fixed subsidies give no wiggle room for wage increases, and labor efficiencies are difficult to find among state mandated employee-to-child ratios. The only other revenue stream — tuition — is already burdensome to parents. Operators have called their own business models broken.

Meanwhile, wages in other industries have ticked up over the last few years amid inflation and a tight labor market, tantalizing child care workers. In Ohio, an estimated 5,710 child care workers left the industry between May 2019 and

12 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P012_P013_CL_20240122.indd 12

1/18/24 1:19 PM

CHILD CARE

For day cares, keeping doors open is a juggling act At Bedford Heights Daycare and Nursery Center, every day has become a financial juggling act for administrator Michael Ingram.

The nonprofit facility is licensed for 96 students, and caters to families at or below the poverty level. Roughly 85% of its students are publicly funded, meaning the day care gets some services or payment from the state to help subsidize their tuition. Ingram’s mom started the day care about 50 years ago and, by now, multiple generations of students have been through.

Since the pandemic, however, operations have become more difficult.

COVID-19 ushered in the closure of day cares statewide and drove up labor and supply costs. Ingram said his annual operational budget is up about 45% since pre-pandemic. Offsetting those increases has proven difficult. Additional programs and funding methods sometimes come with a strict set of rules, and a heavy administrative burden. For parents who don’t receive subsidies, the cost of care is already too high, and most cannot afford to pay more. The estimated median cost to send a toddler to a child care center in Cuyahoga County last year was $13,159, up 17.7% from 2018, according to U.S. Labor Department data.

Ingram said at his facility, toddler care is about $16,000 a year.

“The cost of care is, for parents, it’s outrageous,” Ingram said. “(And) as child care facilities, we are not even getting reimbursed with what the true cost of care is.”

May 2022, according to Bureau of Labor Statistics data.

“After the pandemic, a lot of people didn’t come back to the profession, maybe out of fear for illness and sickness,” said Natisha Bowling, senior vice president of youth development at YMCA of Greater Cleveland. “But also because of inflation. Everything is rising, so people need more money. We’re not the highest-paid profession, but we ask for a lot and the risks are high.”

The YMCA of Greater Cleveland has raised wages for its child care workers since the pandemic. Lead teachers — who need a degree or certification and experience — now make $17 an hour, up from $14. Assistant teachers — an entry-level, part-time role — make $12.75 an hour, up from $10.

Still, staffing shortages persist, as does the question of how to pay for the increased wages, Bowling said. When attendance and staffing levels tanked during the pandemic, struggling child care facilities received stabilization funds from the American Rescue Plan.

That well is running dry, and some predict the program’s expiration will cause child care costs to increase even further.

Progressive think tank The Century Foundation estimated in a September report that the expiration of federal funding programs could trigger a second wave of closures to the tune of 2,111 child care facilities in Ohio.

“We have to develop ways to sustain the level that we’ve raised our staffing to,” Bowling said.

As a result, facilities like Bedford Heights Daycare are left to cobble together funding sources in an intricate juggling act that requires a lot of paperwork and a lot of explaining to parents. If a parent wants to pick up a child early to go to the park, Ingram sometimes must tell them no. Some programs require a set number of hours of curriculum, and if a child misses that instruction, Bedford Heights Daycare could lose that funding.

Bedford Heights Daycare is not alone.

Across Northeast Ohio, child care facilities are contending with a broken business model. The industry has hemorrhaged workers in the past few years as wages have gone up in other jobs, yet day care facilities are hamstrung over raising their wages due to the funding issues.

Child care workers also shoulder the burden of the broken system. Despite required degrees and professional certifications, the average Ohio child care worker now makes less than some McDonald’s employees. To put it starkly: A median child care worker in the state would have to spend 46.6% of her annual earnings to put her own child in infant care, according to data from the Economic Policy Institute.

Turnover is high at Bedford Heights Daycare, even with increased wages. Ingram said the highest paid teacher now makes $24 an hour, up from about $18.

He has found more funding from federal and local programs. An example is Head Start, a federally funded school readiness program for kids 5 and younger. But all those programs — which, by the way, sometimes require the teachers to have more certifications and experience,

bility from 142% of the poverty level, advocates say it is not enough.

“It feels like they’re giving people scraps,” said Kathryn Poe, budget researcher at nonprofit think tank Policy Matters Ohio.

There are many families in Bedford Heights Daycare’s area that miss out on a subsidy by $5 or $10, Ingram said.

“I cannot ask a mom who is at the 148th percentile to pay $325 a week for a toddler,” he said. “They’re not able to make house payments.”

Bedford Heights Daycare could put some of those seats on scholarship, but it loses money when it does so. For the business to run successfully, Ingram said he needs to get every possible dollar for each of his 96 available seats. When a seat is publicly funded, he receives the full amount. That also means that if parents fall behind on copays, they must disenroll.

Enrollment has been largely steady at Bedford Heights Daycare, but the pandemic caused another issue, too. Many of the toddlers enrolling now were pandemic babies who stayed home in their early years. Some need speech or occupational therapy, or another additional service that is limited in the state, Ingram said.

Ultimately, the economics of child care have changed since COVID, said Jonathan Ernest, assistant professor of economics in Weatherhead School of Management at Case Western Reserve University.

“It’s not that profitable to be working in or having a child care facility right now,” he said.

equating to higher wages — come with time-consuming paperwork. Ingram likes to say that in the child care industry, “we have white collar rules, blue collar pay.” He worries that the administrative burden will make turnover worse.

“It’s a double-edged sword,” he said.

“If we get more funding, how much is that leading to burnout? Is that leading to less teacher-child interaction?”

The past six months also have brought the end of pandemic-era federal aid programs. For almost a year, Ingram did not have to collect copays from parents receiving state assistance. Instead, the state reimbursed day cares at the full rate. That ended July 1, and it has been hard for some parents to readjust and make their monthly copays again, Ingram said.

As a result, some older kids have dropped out. Bedford Heights Daycare serves children 18 months through 13 years. Some parents are opting to have their preteens go home alone after school, putting the $45 a week they were spending on day care toward their mortgages, for example.

It’s tough calculus for a family living near the poverty line. In Ohio, a family must be at or below 145% of the federal poverty level — which was $30,000 for a family of four in 2023 — to receive publicly funded child care assistance. If a parent gets a raise, the size of their subsidy decreases until they reach 300% of the poverty level, at which point they are no longer eligible for help. If a family is at 146% of the federal poverty level, they are not eligible to begin with.

Though Ohio recently upped that eligi-

GRACE MCCONNELL

By Ally Marotti

To work full-time with four children Clark would have been paying roughly $2,200 a month for child care.

Hope for more funding There is some hope for increased federal and state funding. The Biden-Harris administration asked Congress to approve $16 billion in supplemental fund-

ing for child care providers as the American Rescue Plan funds dry up. The administration says that if the request is approved, an estimated 6,260 child care providers in Ohio would receive funding from a $565 million pot.

Additionally, the federal government ordered Ohio to increase the rate at which it reimburses child care providers for families receiving public assistance.

The state was among only a few that reimbursed providers at the 25th percentile of the local market rate. That meant that only about one in four child care facilities is financially accessible for families that receive financial aid.

Ohio must increase its rates to the 50th percentile by the end of 2024. Gov. Mike DeWine’s office issued a news release in late November that said the state is increasing its rates to the 35th percentile, to start toward that 2024 deadline.

In Ohio, a family must be at or below 145% of the federal poverty level — which was $30,000 for a family of four in 2023 — to receive publicly funded child care assistance. Ohio falls woefully behind other states on this measure. If a parent gets a raise, the size of their subsidy decreases until they reach 300% of the poverty level, at which point they are no longer eligible for help. Some experts say that could disincentivize parents from accepting raises.

For all families with young children, from those living near the poverty line on up, taking on child care is too expensive, said Michael Shields, an economist at Policy Matters Ohio.

“We have to make public investments in this,” he said. “We have to treat child care as infrastructure.”

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 13

P012_P013_CL_20240122.indd 13

1/18/24 1:19 PM

CRAIN’S LIST LARGEST OHIO M&A DEALS ANNOUNCED IN 2023 Ranked by deal value Company/Asset sold Location

Deal value (millions)

Buyer Location

Seller Location

Date announced Status

Description of company/ asset sold

BRANDS INC. 1 HOSTESS Lenexa, Kansas

$4,611.3

J.M. Smucker Co. Orrville

Various investors

Sept. 11, 2023 Closed

Packaged foods and meats

TRANSMISSION LLC 2 FIRSTENERGY Akron

$3,500.0

Brookfield Corp.

Toronto

FirstEnergy Corp.

Akron

Feb. 2, 2023 Announced

Electric utility

STORES, DISTRIBUTION CENTERS, 3 SELECT OFFICES & PRIVATE LABEL BRANDS OF KROGER

$1,900.0

C&S Wholesale Grocers Inc. Keene, New Hampshire

Kroger Co.; Albertsons Cos. Inc. Cincinnati

Sept. 8, 2023 Announced

Food retail

FLAGS ENTERTAINMENT CORP. 4 SIX Arlington, Texas

$1,876.5

Cedar Fair LP Sandusky

H Partners Capital LLC; H Partners Management LLC New York

Nov. 2, 2023 Announced

Leisure facilities

DEVICE BUSINESS OF 5 ELECTRON COMMUNICATIONS & POWER INDUSTRIES INC.

$1,385.0

TransDigm Group Inc. Cleveland

Communications & Power Industries LLC Palo Alto, California

Nov. 9, 2023 Announced

Aerospace and defense

OF AMERICA INC. 6 TRAVELCENTERS Westlake

$1,346.3

BP Products North America Inc. Baltimore, Maryland

Various investors

Feb. 6, 2023 Closed

Automotive retail

RENEWABLES ASSETS OF 7 UNREGULATED AMERICAN ELECTRIC POWER CO. INC.

$1,200.0

Various investors

American Electric Power Co. Inc. Columbus

Feb. 22, 2023 Closed

Electric utility

SRL 8 ARAG Rubiera, Italy

$1,044.3

Nordson Corp.

Westlake

Capvis AG Baar, Switzerland

June 26, 2023 Closed

Agricultural and farm machinery

GROUP HOLDINGS INC. 9 KERNEL New York

$770.0

AIRO Group Inc. Tipp City

Various investors

March 6, 2023 Announced

Asset management

$730.0

Milacron Holdings Corp.

Cincinnati

Schenck Process LLC Kansas City, Missouri

May 23, 2023 Closed

Industrial machinery and supplies and components

CORP. 11 CALSPAN Buffalo, New York

$729.0

TransDigm Group Inc. Cleveland

Calspan Corp.

Buffalo, New York

March 14, 2023 Closed

Aerospace and defense

GROUP INC. 12 FRANCHISE Delaware

$728.2

Senior management team of Franchise Franchise Group Inc. Group Inc. Delaware Delaware

March 20, 2023 Closed

Specialty retail

BRAND INTERNATIONAL CORP. 13 NUBIA Dallas, Texas

$722.4

Honeycomb Battery Co. Dayton

Various investors

Feb. 16, 2023 Announced

Asset management

BIOLOGICS HOLDINGS LLC 14 FORGE Grove City

$554.0

Ajinomoto North America Holdings Inc. Fort Lee, New Jersey

Forge Biologics Holdings LLC Grove City

Nov. 13, 2023 Closed

Life sciences tools and services

INSTRUMENTATION PLATFORM OF 15 SURGICAL BECTON DICKINSON AND CO.

$540.0

Steris Corp.

Mentor

Becton Dickinson and Co. Franklin Lakes, New Jersey

June 20, 2023 Closed

Health care equipment

GROUP SAS 16 IPACKCHEM Paris

$538.0

Greif Inc. Delaware

SK Capital Partners LP New York

Oct. 31, 2023 Announced

Metal, glass and plastic containers

TELCOM INC. 17 HORIZON Columbus

$394.2

Shenandoah Telecommunications Co. Edinburg, Virginia

Multiple Various

Oct. 24, 2023 Announced

Telecommunications services

ACQUISITION CORP. III 18 TORTOISEECOFIN Overland Park, Kansas

$365.1

One Energy Enterprises LLC Findlay

Multiple Various

Aug. 15, 2023 Announced

Renewable electricity

RASA HEALTHCARE INC. 19 TABULA Moorestown, New Jersey

$315.9

Exact Care Pharmacy LLC Valley View

Indaba Capital Management LP San Francisco, California

Aug. 7, 2023 Closed

Health care technology

SANDS AUSTRALIA PTY LTD. 20 BONDI Port Melbourne, Australia

$284.1

Kao USA Inc.; Kao Australia Pty. Ltd. Cincinnati

Bondi Sands Australia Pty Ltd. Port Melbourne, Australia

Aug. 1, 2023 Announced

Personal care products

INC. 21 ACCLARENT Irvine, California

$280.0

Integra LifeSciences Holdings Corp.

Princeton, New Jersey

Ethicon US LLC Cincinnati

Dec. 13, 2023 Announced

Health care equipment

CONSOLIDATOR ACQUISITION CORP. 22 EVEREST Newport Beach, California

$238.0

Unifund Holdings LLC Cincinnati

Multiple Various

May 22, 2023 Announced

Financial services

RISK SERVICES INC. 23 CROP Decatur, Illinois

$234.0

American Financial Group Inc. Cincinnati

American International Group Inc. New York

May 2, 2023 Closed

Insurance brokers

MEXICO RENEWABLE DEVELOPMENT LLC 24 NEW Albuquerque, New Mexico

$230.0

Exus North America Holdings LLC Pittsburgh, Pennsylvania

AEP Onsite Partners LLC; PNMR Development and Management Corp.

Columbus

Dec. 26, 2023 Announced

Renewable electricity

TECHNOLOGIES 25 REGENCY Stow

$200.0

Iron Mountain Inc. Portsmouth, New Hampshire

Regency Technologies Stow

Nov. 2, 2023 Closed

IT consulting and other services

Rank

AND ALBERTSONS Cincinnati

Palo Alto, California

Columbus

AND PERFORMANCE MATERIAL (FPM) 10 FOOD BUSINESS OF SCHENCK PROCESS LLC Kansas City, Missouri

Franklin Lakes, New Jersey

The list excludes deals that were announced in 2022 but closed in 2023. Deal value is as reported by S&P as of January 2024 unless otherwise noted. It includes earnouts and other payments occurring only when certain conditions are met. Crain's does not verify all information; there is no guarantee these listings are complete or accurate.

Get 25 deals and detailed transaction notes in Excel. Become a Data Member: CrainsCleveland.com/data 14 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P014_CL_20240122.indd 14

1/18/24 1:14 PM

By Scott Suttell

Pair Eyewear, a direct-to-consumer customizable eyewear brand, has its sights set on breaking into traditional retail, and Northeast Ohio is one of the big initial markets in the company’s plan.

New York-based Pair — which was founded in 2017, went on “Shark Tank” in 2020 and to date reports raising nearly $150 million in venture capital funding — last week launched pop-up locations within 110 America’s Best Contacts & Eyeglasses stores in six states nationwide.

America’s Best stores are operated by National Vision Inc. (Nasdaq: EYE).

Northeast Ohio plays a big role in the rollout. Pair products now are available in 16 stores in the region: Akron, Avon, Boardman, Cleveland (at Steelyard Commons), Cortland, Cuyahoga Falls, Fairlawn, Fairview Park, Kent, Macedonia, Mayfield Heights, Mentor, North Canton, North Olmsted, Sandusky and Strongsville.

Other big markets that are part of the launch include Austin, Pittsburgh, Philadelphia, San Antonio and San Jose.

Pair co-CEO and co-founder Nathan Kondamuri said in an interview with Crain’s that Cleveland “is a really exciting place for us.” He said Cleveland has a “highly engaged customer base,” and demand for the company’s direct-to-consumer eyewear has been strong in the Midwest. Establishing a retail presence via the National Vision partnership will help further build Pair “as a household name,” he said.

The company offers $60 base frames and, for $25, more than 1,000 “top frames” in various styles, all aimed at adding some fun to the purchase. Many of the top frames feature licensed designs from brands including DC, Marvel, the NHL, MLB, “Harry Potter,” “Sesame Street” Vincent Van Gogh and Frida Kahlo.

Kondamuri, a lifelong glasses-wearer, said the company was formed on the notion that a pair of glasses shouldn’t be a “static medical device” and should instead bring “an element of fashion and personalization” to the consumer.

Megan Molony, chief merchandising and managed care officer for National Vision, said the partnership with Pair is focused on the “cutting-edge style- and personality-driven future of eyewear.” She said the partnership makes sense because Pair offers “affordable eyewear while delivering exceptional service.”

National Vision is one of the largest optical retail companies in the United States, with more than 1,400 stores in 44 states and Puerto Rico.

Pair has grown rapidly in less than a decade.

“Shark Tank” offered a big boost when two judges, Lori

Greiner and Stitch Fix founder Katrina Lake, invested $400,000 during an episode that aired in March 2020.

At the time, Pair had two fulltime employees. Today, Kondamuri said, it has “scaled up very rapidly” to 160 employees. Most products continue to be made in the U.S., he said.

The company has raised $145 million in venture capital funding, including a $75 million Series C in October 2023. Prysm Capital led that funding round and was joined by existing investors New Enterprise Associates, Javelin Venture Partners and NFL player Christian McCaffrey.

CONTRIBUTED

Pair Eyewear makes Cleveland part of its debut in traditional retail

Kondamuri said he and co-founder Sophia Edelstein, both Stanford University alums

(and makers of the first prototypes, by hand), had always anticipated the company establishing

a physical presence to augment the online, direct-to-consumer business. The question was how to do it. He said the company had considered its own brick-andmortar locations, but that is “very capital intensive,” and a partnership with an existing retailer made more sense.

This pilot-stage rollout of 110 stores could expand to 900 by the end of 2024, Kondamuri said. He said the average Pair customer has eight top frames, and a main goal of the in-person experience through the National Vision partnership is to “establish a deeper, long-lasting relationship” with both new and existing customers.

The Modern Law Firm.

Extensive regional experience.

Recognized strength in sophisticated deals.

Taftlaw.com JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 15

P015_CL_20240122.indd 15

1/19/24 10:18 AM

Ronayne discusses levies, TIFs and political relationships

By Kim Palmer

Chris Ronayne took over as Cuyahoga County executive just as some of the area’s most prominent, longstanding philanthropic organizations — like the United Way of Cleveland — started to shift strategies away from providing “crisis aid” funding and toward addressing the causes and systems affecting economic mobility.

As head of the county, Ronayne’s administration provides funding for those critical and essential services — such as child protective services, senior and indigent care — for the county’s most vulnerable members.

These important and life-supporting services are dependent on the passage of two crucial Health and Human Service (HHS) levies.

One of those, an eight-year, 4.8mill levy expiring in 2024, is set to be on the state’s primary ballot in March.

The levy is vital to providing funding for these much-needed services at a time when the aforementioned organizations are pulling back on some of the hands-on frontline services in the region.

Ronayne said that he’s not overly concerned about being able to pass the levy and provide those services. In 2020, 70% of the county voted “yes” on the other of the two levies: a 4.7-mill levy that added an additional $41 a year for homeowners in taxes for every $100,000 in property value.

But when asked if the new shift in philanthropy policies put more pressure on what the county must provide for residents, Ronayne’s “yes and no” answer is more nuanced.

“The hope is that if you’re dealing with early intervention, like these groups plan to do, in the long run, it’s helping deal with the overall need,” he said. “In the short term, I can see how there’s probably more pressure incumbent upon us,” he added.

EXECUTIVE From Page 1

Ronayne is what you would call a people person. It makes sense for someone who has spent decades of his professional life working on policy and with the major movers and influencers in the region.

“I’ve been around,” Ronayne jokes, adding that his past experience informs a lot of what he brings to—and plans to do with— his latest position with as County Executive. “The hope is that there’s not a huge learning curve, but I have spent a lot of time, during the campaign and this year, listening.”

Ronayne has spent a lot of his first year in the executive position listening and checking in on what he calls the “vitals of the community.”

The administration that governs Cuyahoga County is responsible for some of the most challenging

The levy, which is projected to generate about $137 million in 2024, was sponsored by 10 of the 11 county council members and supported by Ronayne’s administration.

The health and human service aspect of Ronayne’s job was front and center during his first weeks as county executive when children were being dropped off at county government buildings.

“One was dropped off directly from a school bus, another came straight from a hospital. Those are two real examples that happened in the first two weeks that I was here,” he added.

His administration went into action and as Ronayne rounds out his first year, he can boast about partnering with the Centers, formerly the Centers for Family and Children, to create a new front door for kids experiencing trauma and in need.

“We set forth to create a setting that would feel like a home away from home, where a kid wasn’t dropped off at a building, given a blanket and a corner in a room, but where they had the dignity of their own room, bed where specialists could help them and help their families with what they needed,” Ronayne said.

Under Ronayne’s leadership, the Child Wellness Center in partnership with the Centers, has eight beds and some suites at the Christian Children’s Home on 115th and Lorain Avenue.

“It was a priority for me,” Ronayne said. “We are working on having 58 beds in a place that feels more akin to a home as they await placement.”

Prioritizing the wellness center comes from a discipline of what Ronayne calls “listener leadership,” a practice he has used to learn from the people you are charged with representing.

“It is reaffirmed to me about how we have this incredible network of nonprofits that are doing social and economic problems there are. In addition to the more than 1.2 million residents in 59 communities, Ronayne’s administration, made up of 4,500 employees, oversees the county jail, juvenile jail, the county courts and nearly all of the region’s most critical health and human services.

It’s a big lift for a government that Ronayne points out is “relatively new.”

“I think Cuyahoga County voters are still getting to know this new form of government, the County Executive form,” Ronayne said.

“When you think about it, we’re still reasonably young, this new chartered government. We’re 13 years old. We’re only a teenager.”

One of his self-proclaimed goals coming to the job was to reduce drama and get things done, a goal he believes, with the help of his seasoned staff, that he has accomplished.

amazing things for our constituents today,” Ronayne said. “There is not a week that goes by that I don’t try to visit one of our nonprofit organizations that support our network of frontline providers and the businesses that support the region.”

Re-opening the Veteran’s Memorial bridge Something Ronayne heard after a listening session held in the space under the Veteran Memorial bridge is that residents want more activated spaces for events and activities.

“With all the area being developed along the Cuyahoga River— like the Irishtown Bend and Canal Basin Park—it all leads up to the Detroit Superior Veterans Memorial bridge,” Ronayne said.

The former county planner has plans to “re-animate” the area and his administration is about to take the first step with a consultant team who Ronayne said is soon to be under contract with the county.

“We’ll also reopen that space to the public this summer,” Ronayne said. “We’re going to have some events and activities up there. We are making progress on all fronts to redevelop that space.”

Working with the city of Cleveland and the state of Ohio That progress—and any future progress on other lakefront or downtown development—are all made easier with a good relationship with his partner at the city of Cleveland.

“We’ve got a good working relationship with Mayor (Justin) Bibb,” Ronayne said. “It is a good peerto-peer, principal-to-principal relationship and we got a lot done in a year. As it relates to Cleveland City Council, I have the benefit of “I’m extremely pleased with the progress of the team we have assembled and with that partnership. We have gotten a lot done,” Ronayne said.

This upcoming year is a year of getting our ducks in a row, he added.

Dealing with the old Justice Center and the new jail In the next five to ten years, the 6.7-acre downtown Justice Center-Courthouse Square property will be disassembled as plans to relocate the Cuyahoga County jail, Cleveland Police headquarters and, possibly, moving the County courts and other administrative offices is a logistical challenge and a huge development opportunity.

“It is one of the most prime locations from New York to Chicago,” Ronayne boasts. The county is currently evaluating about seven pro-

knowing all of them and having good relationships with them.”

Ronayne adds that he and Bibb are “in lockstep with aspirations to see our waterfronts develop” and that he is thrilled to see the city’s administration focusing on the waterfront.

That good relationship is important as Bibb’s administration pushes forward a long-term tax increment financing (TIF) scheme to finance the shore-to-core-toshore development involving a huge swath of the city’s waterfront and downtown.

The TIF district would divert tax revenue increases from the county coffers, but Ronayne is willing to suspend any criticism of the legislation as the administration looks at all the tools available to move development along.

“I’ve seen the upside of TIFs,” Ronayne said. “What I’ve always said is that we need to constantly monitor TIFs: who pays and who benefits? What is the return on investment to the community? Is the public getting something for the effort? But there is no free lunch, somebody always pays when taxes are diverted, (like) the Metroparks, Cleveland Public Library,” he added.

Cleveland’s proposed TIF district would be less of an issue if there were more funding coming from the state, Ronayne admits.

“My mother always told me to be happy for what you have, not for what you don’t have. But that being said, I think we are at a moment in time where there’s justification to get a little more funding from the state,” he said.

“I sta iss so

posals from across the country with plans to renovate or find a new home for the county courts and redevelop the massive brutalist-style building or re-imagine the whole site.

“Our commitment to the city was to keep the courts downtown, and that’s where they are going to be,” Ronayne assures. “But whatever happens to that site, I believe it will be a strong contributor to the city of Cleveland’s downtown reimagination.”

Any plan that includes renovation or demolition of the Justice Center and includes a $500 million to $750 million jail and court relocation will be expensive but necessary because of the growing costs associated with repairing and running the massive complex.

“That vertical tower in the sky that is today’s county jail downtown—you can almost hear the big sucking sound it makes from a

financial standpoint,” Ronayne said. “We projected hundreds of millions of dollars of deferred maintenance that was going to cost the taxpayer if we just punted this project down the road for another administration to deal with.”

What Ronayne sees as a practical decision is controversial for others. The plans regarding how much a modern-day jail will cost and where the new jail will be located have caused delays in the timeline which, because of inflation and wage growth, means the cost to build has increased.

Ronayne came out against the previous brownfield site for the jail located on Transport Road in the Flats, preferring to find his own location after sifting through 41 options (based on the volume of work that the county council had already done with consultants). In the fall of 2023, his administration selected a $38 million site off of

Gra tion Hei N Hei vote cou tax tion will tooplan Th mot and buil tiall cen futu buil for exp U whe one “I

16 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P016_P018_CL_20240122.indd 16

1/19/24 2:06 PM

—C

H wor Mik agre pali cau Th whi zen sion wou hom the gros

Fs,” ways ntly who inthe the nch, axes rks, dd-

dise if ming s. e to not that motifiding

yne s of red to nted anith.” ctifor how cost lothe flathe

the jail the n loope of had ). In tion ff of

S

MELT From Page 1

“Ever since March 16, 2020, our brains keep saying that things will eventually go back to normal. Logic says things will go back to normal,” Fish said. “But it was the beginning of 2023, when we closed two stores, when we realized: things just aren’t coming back.”

With the closure of its Avon location earlier this month, Melt has shuttered five stores in four years—a rate of consolidation on par with its past pace for openings.

And while the intent is to pause closures here, the future is anything but certain.

“It is incredibly urgent that we tighten everything up now because, frankly, if we don’t, there will be no more Melt,” said Melt chief operating officer Neil Sanchez. “It is that dire.”

KEN BLAZE

Melt’s beginnings

“I hope that we coalesce our citizens in our state to develop a strategy to level-set on issues that are priorities for all of us, that sometimes get lost in the noise.”

— Chris Ronayne, Cuyahoga County executive He and Bibb have a “good working partnership” with Gov. Mike DeWine’s office but disagreements on Ohio’s municipality’s home rule authority cause friction.

The upcoming 2024 election, which could see a vote on a citizen-led redistricting commission, might mean Cuyahoga would have more say regarding home rule enforcement and how the county’s 40% of the state’s gross product is spent.

“We saw it in the last election on Issue 1 about women’s reproductive rights, there was a coalescence of the shoreline counties voting together,” Ronayne said.

“I hope that we can use that common ground to get somewhere on other matters. I hope that we coalesce our citizens in our state to develop a strategy to level-set on issues that are priorities for all of us, that sometimes get lost in the noise,” he added.

Granger Road and Transportation Boulevard in Garfield Heights.

Now with a site in Garfield Heights under contract and a vote by the Cuyahoga County council to renew a 40-year sales tax measure to pay for construction, Ronayne said, the project will break ground “in the nottoo-distant future” after a year of planning and design.

The site is accessible but remote from the main community and there is enough space to build out a campus that, potentially, could house a diversion center and reentry offices in the future. The current plans are to build a horizontal jail that’s safer for prisoners and staff, Ronayne explains.

Ultimately, he is content with where the project stands after his one year in office.

“I’ve watched some communi-

ties struggle for years, some more than a decade trying to develop a strategy for a jail, we have been working on this for about seven years now,” Ronayne said.

Despite some back and forth on the final jail site, Ronayne credits his “good working relationship” with the 11-member county council, including bi-weekly meetings with the council president, for a successful first year.

“We are here to get business done for the people and again, enrich the quality of life,” Ronayne said. “We are too busy to argue and we have the opportunity for a triple play here. First, there is the opportunity for a better and more humane jail. Second, we can have a more effective, efficient courthouse. Third, we avail ourselves of a sizable downtown redevelopment initiative. That is a triple play.”

CLASSIFIED SERVICES CLASSIFIED SERVICES

For Fish, a punk rocker who traveled the country in the 1990s drumming with his band “Whatever,” the restaurant industry was always a planned fallback from a full-time music career.

By the 2000s, Fish—an alumnus of hospitality and business programs at Cuyahoga Community College—already had several years of experience managing kitchens across Northeast Ohio.

But he always dreamt of running a restaurant of his own.

Fish drafted a variety of menus with some kind of gastropub in mind, a concept that was becoming increasingly popular in the mid-2000s.

He opted to pursue an idea for specializing in gourmet, overstuffed grilled cheese sandwiches and craft beer, a seemingly novel combination that was unlike anything else in the market at the time.

“I wanted to have something that Cleveland hadn’t seen before,” Fish said.

In 2006, Fish opened Melt’s flagship restaurant in Lakewood on a shoestring budget. Its space had long been home to Bud’s White Door Saloon, an establishment with roots dating back to pre-Prohibition.

Customers went nuts.

With total seating of less than 70 between the bar and dining room, Melt’s wait times stretched as long as three hours. Even after the space expanded in 2008, waits remained a daily occurrence.

Television stations took notice.

In 2010, Guy Fieri showcased Melt on The Food Network’s “Diners, Drive-Ins and Dives,” and Adam Richman featured the restaurant on The Travel Channel’s “Man v.

Food.”

Those shows “really put us on the regional and national scale,” Fish said.

Patrons across Northeast Ohio sought Melt out. Locals took their friends and guests. Out-of-state visitors scheduled pit stops at Melt as they traveled through Cleveland. Superfans branded themselves with Melt tattoos.

Fish had launched Melt with a humble plan of supporting himself, his family, his staff and the

Melt Bar and Grilled owner and founder Matt Fish | MELT BAR AND GRILLED |

neighborhood with a small business all his own. He could’ve probably ridden out that one store for the rest of his career.

But as Melt’s popularity exploded, Fish was worried about copycats.

“People were like, wow, that is such an amazing concept and so simple, why didn’t I think of that?

So now I’m like, what if someone with deeper pockets than me, better culinary chops than me, comes here and decides to open a grilledcheese concept?,” Fish said. “What is that going to do to my business?”

In a bid to secure its place in the market as an original amid this skyrocketing popularity, Melt opened its second restaurant in spring 2010, this time in Cleveland Heights.

While a copycat never came, Melt now saw the potential in grabbing market share by building out its footprint.

‘We just continued to open stores’ Throughout the 2010s, demand for Melt remained so strong that adding more shops just made sense.

Melt’s Independence restaurant opened after Cleveland Heights in 2011.

Those spots were followed by a Mentor location in 2012, which marked the first time Fish agreed to take on debt to finance growth—a theme that continued with additional stores moving forward.

Money was cheap, and everyone seemed to want a Melt in their hometown.

Melt expanded to Columbus with two more locations, one each in 2013 and 2014. An Akron restaurant opened in 2016.

Continued on next page

Advertising Section

CLASSIFIEDS

To place your listing in Crain’s Cleveland Classifieds, contact Suzanne Janik at 313-446-0455 or email sjanik@crain.com

EXECUTIVE RECRUITER POSITION AVAILABLE

Crain’s Career Center

jobs.crainscleveland.com

Keep your career on the move. Create a job seeker profile at jobs.crainscleveland.com Astro Manufacturing and Design - Inside Sales Account Representative They are on the lookout for a driven individual who is not just an employee but an essential member of a growing family. Identifying new areas of opportunity with our current customers, you can be the driving force behind the company’s growth in newly targeted markets. They need someone that can embody a proactive “make-it-happen” approach. We cater to a select customer base consisting of major businesses in aerospace, medical, government, and other industries. This position reports directly to the President. More Information and Details at jobs.crainscleveland.com Social Media Specialist - Great Lakes Brewing Company Plan, produce and curate creative, innovative, and engaging brand content including eye catching photography, video content, and on-brand copy. Provide strategy to elevate awareness, earn brand loyalty, promote market innovation, and drive revenue across a variety of emerging technology platforms.

Complete job description and requirements available at jobs.crainscleveland.com Create a job seeker profile and set up a customized job alert for your career goals.

Receive weekly emails that highlight some of the top jobs available in Cleveland Access career resources, job searching tips and tools. jobs.crainscleveland.com JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 17

P016_P018_CL_20240122.indd 17

1/19/24 2:06 PM

Advertising Section

PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com CONSTRUCTION

HEALTH CARE

LAW

Marous Brothers Construction

The MetroHealth Foundation

Marous Brothers Construction, the award-winning, multi-generational construction company based in Willoughby, is pleased to announce Joel Maas as its new Director of Marketing.

Joel has nearly two decades of experience leading marketing efforts across various sectors, including private equity and real estate development. As Marous Brothers Construction’s marketing leader, Joel will focus on crafting and executing marketing, branding, and go-to-market strategies for the rapidly growing firm.

The MetroHealth Foundation welcomes Lola Garcia and Lawrence Mack to its board of directors.

Garcia is an attorney and partner at Ulmer & Garcia Berne LLC who also serves on the boards of Providence House, SPACES and Say Yes Cleveland.

Mack, a former executive vice president at KeyBank, is past board chair at Montefiore and currently serves on the boards of Mandel Jewish Community Center and Ohio Jewish Communities, among others.

Mack Garcia and Mack will support The MetroHealth Foundation in raising philanthropic support for The MetroHealth System.

Schneider Smeltz Spieth Bell LLP

CONSTRUCTION

Kyle Gee was elected an Officer of the Estate Planning, Trust, and Probate Law (EPTPL) Section Council of the Ohio State Bar Association. Kyle’s service will span eight years in the roles of Treasurer (currently) through Chair, for an attorney organization representing more than 3,700 members. The EPTPL Section leadership is actively involved in regulatory, legislative, and judicial matters. Kyle is now also serving on the Editorial Advisory Board for the Probate Law Journal of Ohio.

Ohio CAT LEGAL

Calfee, Halter & Griswold LLP

HEALTH CARE

FINANCIAL SERVICES

Gries Financial Partners Neil Varnish is an Operations Associate for Gries Financial Partners and brings a wealth of knowledge & expertise in operational processes, including account administration, trade settlement, and performance reporting. Neil previously worked in the operations department at MAI Capital. Prior to that position, he was a risk management intern for the NRP Group. He has a BA in Economics from The Ohio State University. Outside of the office, Neil volunteers for and donates to United Way.

The MetroHealth Foundation The MetroHealth Foundation welcomes Lisa Ramirez, PhD, and Luis E. Tollinche, MD, to its board of directors. Dr. Ramirez is a clinical psychologist, Ramirez Associate Director of Pediatric Psychology at MetroHealth and Director of Community and Behavioral Health in MetroHealth’s School Health Program. She is an Associate Professor of Psychiatry at Case Western Reserve University School of Medicine.

Dr. Tollinche is Chair of the Department of Anesthesiology at Tollinche MetroHealth and a Professor of Anesthesiology at Case Western Reserve University School of Medicine. He previously held academic and clinical appointments at Memorial Sloan Kettering Cancer Center.

They will support the Foundation in raising philanthropic support for The MetroHealth System.

Abbey Kinson Brown has been elected Partner at Calfee. An experienced Labor & Employment lawyer, Abbey assists business clients with their management-side employment law issues and resolves employment-related litigation matters, including restrictive covenant, trade secret, wage & hour, and employment rights claims. She has been recognized

by Best Lawyers: Ones to Watch in America® (Cleveland) in Labor and Employment Law – Management (2023-2024) and Labor and Employment Litigation (2021-2024).

NEW GIG? Preserve your career change for years to come.

Plaques • Crystal keepsakes Frames • Other Promotional Items

C O N TA C T

We are pleased to announce the promotion of Gillian Taylor Henning to Rental Store Manager at our Canton and Youngstown Cat Rental Stores.

Having concentrated her efforts as a Rental Coordinator in 2023, Gillian will now further her expertise in customer service, rental revenue growth, and overall rental responsibility.

Gillian is the daughter of Ken Taylor, President of Ohio CAT, and the fourth generation of Taylors who have been involved in the business since 1945.

Congratulations, Gillian!

Laura Picariello Reprints Sales Manager lpicariello@crain.com (732) 723-0569

From previous page Then came 2017, a whirlwind year for Fish with new Melt locations introduced in Dayton, Avon and Canton. Cedar Point opened a Melt shop that year as well.

“We just continued to open up stores,” Fish said. “People wanted us to. The need was there. I was getting calls daily from brokers, mayors, economic development directors, who are like, open up here, open up here, open up here.”

By 2019, the Melt enterprise comprised some 350 employees across 10 company-owned restaurants. It was easily among the fastest-growing restaurant groups in the state.

Expanding at such a clip didn’t come without growing pains.

“Going into 2019, we had grown so fast that we lost some of our soul,” Sanchez said. “That’s when we first said, let’s tighten up.”

The company refocused on management and food quality within its growing enterprise. And as Melt rolled into 2020, the business was firing on all cylinders.

Melt’s January and February— typically some of the slowest months in the restaurant business—that year were the best yet in the history of the company, putting it on track for what Fish suspects could have been his most-profitable year yet.

But then came the gut punch of a global pandemic and mandatory lockdowns.

“March 16, 2020, was the day they shut us down,” Fish recalls.

“That was literally the day that my life and everybody’s lives changed.

Everything just fell apart.”

Struggling for profitability Melt scraped its way through an era of pandemic quarantines.

Stimulus money helped. Loan payments were temporarily deferred, but never forgiven.

Personal guarantees were now hanging over Fish’s head—he’s got at least $1.8 million in debt with Huntington Bank from U.S. Small Business Administration loans that he was encouraged to take out.

Melt’s Cleveland Heights store, its second to open, became the first to close, a decision further motivated by the expiration of a 10-year lease. The closure of Melt’s Columbus shop at the Short North followed.

As restaurants reopened, Fish was hopeful customers would eventually come back like they used to.

Nearly four years later, he’s still waiting.

Melt isn’t the shiny new thing anymore. The concept of restaurant-quality food in a bar setting is not as novel as it once was. And with inflation stretching budgets, the public isn’t eating out quite like it used to.

And then there’s the economy, which “isn’t doing us any favors,” Fish said.

Couple all this with heightened costs of doing business and challenges with finding good staff, and operating restaurants is simply more difficult and more expensive.

Melt held off on raising prices

for a while, but when it did, customer traffic further diminished.

Some guests balk at a $19 sandwich, even one as deluxe and massive as Melt has to offer.

Melt’s revenues have been trending down between 5% to 7% each year since 2020, prompting the closures in Canton and Dayton last year and Avon this year.

The last year Melt turned a profit was 2019.

“Conditions have never been like this before,” Sanchez said.

“It’s honestly never been this hard on all aspects of the business. It’s just incredibly challenging.”

Before COVID-19, Melt was deep in talks to open new locations in Detroit and Pittsburgh.

With the costs to open a Melt store over $1 million pre-pandemic, if those had come online before 2020, Melt would’ve likely folded by now.

Fighting to survive As was the plan in the late 2010s, Fish and Sanchez say the goal now is to circle the wagons and focus on the dual mission of improving efficiency and quality.

The menu continues to be tweaked to appeal to consumers who are increasingly health minded. That means offering wraps in place of thick, grilled bread, as well as half sandwiches.

But no efforts yet have brought in the throngs that Melt used to draw.

“We don’t really have an end goal other than survival,” Fish said. “I have to get us back to being a profitable company because we haven’t been since the pandemic.”

Fish notes that he is searching for an investor or business partner to help the company navigate these turbulent waters.

As profit suffers, there’s not as much to sell.

But Fish emphasizes that he’s not looking for a bailout so much as someone to help the company through these tough times.

“I’m not looking for a person to just dig us out of some hole that I’ve created for myself,” Fish said.

“I’m looking for someone to help us strategically move through these waters, to get through this and try to expand again.”

Fish said the pandemic has turned him into a pessimistic person, but his heart is still in the business. And while he has no regrets about the past, he worries about the future and longs to build Melt back up to what it once was.

“The general public, I think, doesn’t always understand the amount of time, the effort, the blood, sweat and tears, and sweat equity that goes into running a small business, let alone a restaurant,” Fish said.

“It’s very difficult,” he added.

“It takes every ounce of effort, every ounce of emotion and every dollar to do it. When it’s successful, it’s great. When it’s middle of the road, it’s still great. And when it’s failing or struggling, it’s still great but very difficult. That’s the situation that we’re in and that a lot of people are in. And that can be hard to explain to someone.”

18 | CRAIN’S CLEVELAND BUSINESS | JANUARY 22, 2024

P016_P018_CL_20240122.indd 18

1/19/24 2:06 PM

CrainsCleveland.com President and CEO KC Crain Group publisher Jim Kirk (312) 397-5503 or jkirk@crain.com Associate publisher Amy Ann Stoessel (216) 771-5155 or astoessel@crain.com Interim editor Ann Dwyer (312) 649-5349 or adwyer@crain.com Director of audience and engagement Elizabeth Couch, (313) 446-0419 or elizabeth.couch@crain.com Director of visual media Stephanie Swearngin Creative director Thomas J. Linden Managing editor Marcus Gilmer 216-771-5169 or marcus.gilmer@crain.com Special projects editor Scott Suttell Assistant managing editor John Kappes Projects editor Stacy Sominski Web editor Damon Sims Associate creative director Karen Freese Zane Digital design editor Jason McGregor Art directors Kayla Byler, Carolyn McClain, Joanna Metzger Cartoonist Rich Williams Notables coordinator Ashley Maahs REPORTERS Paige Bennett, Health Care, Nonprofits, Philanthropy (216) 771-5479 or paige.bennett@crain.com Stan Bullard, Real estate/construction (216) 771-5228 or sbullard@crain.com Jack Grieve, audience engagement jack.grieve@crain.com Jeremy Nobile, Finance/legal/beer/cannabis (216) 771-5255 or jnobile@crain.com Kim Palmer, Government (216) 771-5384 or kpalmer@crain.com Joe Scalzo, Sports business (216) 771-5256 or joe.scalzo@crain.com Dan Shingler, Energy/steel/auto/Akron (216) 771-5290 or dshingler@crain.com ADVERTISING Senior vice president of sales Susan Jacobs (312) 649-5492 or susan.jacobs@crain.com Sales manager Mara Broderick (216) 771-5158 or mara.broderick@crain.com Events manager Missy Chambless (216) 771-5388 or missy.chambless@crain.com Sales and marketing coordinator Shannon Smith Account executives Kaylie Moran, Ed Sivillo, Melissa Streicher People on the Move manager Debora Stein (917) 226-5470, dstein@crain.com Classified sales Suzanne Janik (313) 446-0455 or sjanik@crain.com Inside sales Tawni Sharp CRAIN’S CONTENT STUDIO Senior director of Crain’s Content Studio Kristin Bull, (313) 446-1608 or kbull@crain.com PRODUCTION Vice president, product Kevin Skaggs Product manager Tim Simpson Media services manager Nicole Spell Pre-press and digital production Craig L. Mackey CUSTOMER SERVICE (877) 824-9373 or customerservice@crainscleveland.com Reprints Laura Picariello (732) 723-0569 or lpicariello@crain.com

Crain’s Cleveland Business is published by Crain Communications Inc. Chairman Keith E. Crain Vice chairman Mary Kay Crain President and CEO KC Crain Senior executive VP Chris Crain Chief Financial Officer Robert Recchia G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Editorial & Business Offices 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 (216) 522-1383

NOTABLE LEADERS IN FINANCE

Volume 45, Number 3 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except no issue on 1/2, 5/27, 7/8, 9/2, 12/2 and 12/30,

by Crain Communications Inc. at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1256. Periodicals postage paid at Cleveland, OH, and at additional mailing offices. © Entire contents copyright 2024 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.

Nominate a senior leader in finance who shares their expertise with others in the field.

NOMINATE BY MAR. 1

Subscriptions: 1 year - $99. For subscription information and delivery concerns please email customerservice@ crainscleveland.com, or call 877-824-9373 (in the U.S. and Canada) or 313-446-0450 (all other locations).

CrainsCleveland.com/NotableNoms

Postmaster: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2732. Allow 4 weeks for change of address.

JANUARY 22, 2024 | CRAIN’S CLEVELAND BUSINESS | 19

P019_CL_20240122.indd 19

1/19/24 10:18 AM

BUY TICKETS CrainsCleveland.com/2024Cannabis

THURSDAY, JANUARY 25

1-6 PM | Corporate College East Gain insight into the future of Ohio’s cannabis sector and what it could mean for the state’s economic landscape with the passage of Issue 2.

Speakers include:

DOUG HELLYAR

MYLES J. BAKER

President + COO Lume Cannabis Co

Member Dickinson Wright

JEANE’ HOLLEY

CAROLINE HENRY

Director of Government Affairs and Public Relations Harvest of OH

Vice President, Government Affairs Buckeye Relief

JANA HRDINOVA

ALLY REAVES

Administrative Director Drug Enforcement and Policy Center at Ohio State University

BREAKOUT SESSION SPONSOR

Owner & CEO Midwest CannaWomen

MEDIA SPONSOR