State bureaucracy, COVID and inflation created a “perfect storm” that resulted in the decision to close Los Banos Drugs, a corner drug store and soda fountain that has been a downtown Los Banos icon for decades.
The last day of business for the store will be June 17. The last day a prescription can be filled will be June 1.
Store owner Duane “Pudge” Griffin, the pharmacist who purchased the Los Banos Drugs from Mel Hartsoch in July 2019, said he felt optimistic about the business when he bought it
“I grew up in Los Banos,” he said, “and I knew how important it was to the community. I thought it would continue to be successful.”
Almost immediately after he took over the store, he ran into obstacles. The first was a long delay in the state granting him a pharmacy license. Instead of taking an expected month or two, it took eight months, even though Griffin said he had done everything the state asked.
During that time the state didn’t allow him to fill any pain-killing prescriptions.
One month after he received the license, in early 2020, COVID hit the U.S., and by March people were sheltering in place. Business in the store dropped drastically. While the store remained open, the lunch counter had to close. Few people came into the store. Many turned to getting prescriptions by mail from other drug outlets.
Then in 2021, after most people had been vaccinated and life was returning to normal, inflation hit. “The drugs that I needed to purchase went up in price by as much as 20%,” Griffin said. “Meanwhile the reimbursements I was getting from the insurance companies stayed the same.
“By the end of 2021,” Griffin said, “after I looked back at our balance sheet for the year, I realized we were in a continuing deficit.”
“It was like a homeowner,” Griffin added, “who realizes that his family’s income month after month is much less than his expenses and he can’t continue to make the mortgage payments. He has to start thinking of selling his home before he’s foreclosed.”
Griffin realized things were not going to get better anytime soon. Many people who needed painkillers in 2019 and had to go to a different pharmacy took their other prescriptions there, too, and have not returned.
Other former customers who began to get their prescriptions filled by mail continued to do so, saving the standard cost of a co-pay. And inflation wasn’t going away.
Early in 2022 Griffin started to look at his options, including selling his inventory to another pharmacy. He realized, given the continuing deficits the store was running, he needed to sell before he was forced to declare bankruptcy.
Working with a broker, he explored Wal-Mart, CVS, Walgreens and Rite-Aid. It turned out Rite-Aid made him the best and most timely offer. By April he had made a tentative plan to sell to Rite-Aid. It looked as though the closing date would be mid-June.
Once he had determined that date, regulations required that he give public notice of a “bulk sale” of his inventory, approximately one month before the sale was completed. On May 10 that public notice was posted in a newspaper, and then it gradually became known that the store would close.
“I waited until the bulk sale notice was printed to tell my employees and alert my prescription customers,” Griffin said. “Most of them understood, although some were upset. Employees who noticed how much business had gone down had seen the writing on the wall.”
During this process, Griffin said, Rite-Aid has been very helpful. The company will not be continuing a drug store in downtown Los Banos, but it set up a process to interview Los Banos Drug employees for jobs at Rite-Aid, Griffin said.
While Griffin thinks it might be possible for someone else to set up another drug store business on the corner of Sixth and J Streets, he believes it’s unlikely. “A drug store is one of the most regulated businesses in the country,” he said, “especially when it includes a lunch counter.”
Among the agencies that have regulated Los Banos Drugs are the Food and Drug Administration, the Drug Enforcement Agency, the Health Department and the state agency regulating pharmacies. “And regulations continually change,” Griffin said, “forcing the owner to upgrade facilities or increase paperwork. It’s a tough business.”
After the store closes on June 17, Griffin will continue to stay inside the building in a two-week process of completing paperwork. After that, he’s not sure, although he plans on staying in Los Banos. “I love this community, always have,” he said. “I feel at home here.”
John Spevak’s email is email@example.com.