2020/NO.13 - Well, what a traumatic month that was! The realisation that the impact of COVID-19 is with much regret is here to stay. The attitude of the big six that are the subject of the Pubs Code has been revealing. With the partial exception of Admiral Taverns, there is a total contrast with an ever-growing list of Family Brewers. Deferring rent is like a long and slow death knell for the pubco tenanted estates. Look at it this way, who can absorb the long term debt pain better, the corporate landlord or the tenant. Who has the most “pull” with their financial responsibilities?
Corporates have in some cases massive toxic debt. So much so that the debts are almost too big to be allowed to fail. The old adage goes that if you owe the bank a little they will be as hard as hell on repayments. If you owe quite a lot they might seek an accommodation but still be downright firm, but if you owe them masses they will bend over backward to be nice to you. Well, that’s the theory. The tenant has no such potential cushion.
We hate to be negative but the outlook is not exactly rosy for our many Restaurant clients and pubs with a substantial food trade. The key, as we are sure you are all aware, is social distancing. Worth a go to see how, in practical terms, the dining area or restaurant layout can be switched around to allow for social distancing. You may find that two meters is soul-destroying, maybe one and a half metres might work better ? We had just such a fiddle around with one of our local clients who normally would have a capacity of about 60 covers. Judicious jiggling around with tables placement actually produced a maximum capacity of 40 covers. The other idea was cutting down the size of the menu options and also the potential of clientele pre-ordering and part pre-paying some or all of the menu requirements. The idea was floated amongst some of the previous diners and was surprisingly well received. It cut out the genuine reluctance to even venture out from the vulnerable sector who after all are some of the biggest spenders. All is not total gloom and doom!
We are looking ahead to when the PCA and PGB moratorium for negotiation is lifted on 30th June. We are in high hopes that the date will be honoured. It is pointless delaying the inevitable. Statutory dates are still being honoured such as lease renewals and rent review dates. Storing up a log jam of pending negotiations will only make matters very much worse. In those negotiations, when they happen, we are looking for a solid dose of reality from Landlords. Reality must sink in that the trade has been scarred mightily and will not return back to pre-pandemic trade for a very very long time. Profits in the first year of reopening will struggle to break even let alone have any capacity for paying anything other than a subsidised rent. Pretending that this is not the case is to compare with a famous quote from the late George Carmen QC…
"The defendant is as an ostrich with it’s head in the sand, exposing its thinking parts”. Quite.
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And finally, a couple of quips to lighten up proceedings….
"Setting a good example for your children takes all the fun out of middle age”. And….
"They said a mask and gloves were enough to go to the supermarket. They lied, everyone else has their clothes on”.
Stay safe and stay healthy.
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