Downey: bars will not survive without National Time OutBy Melita Kiely
Milk & Honey owner Jonathan Downey has ramped up campaign efforts to introduce a nine-month National Time Out on rent payments and warned that without one, bars will not survive the pandemic as landlords continue pursuing rent payments.
The UK government ordered the hospitality sector to close due to the Covid-19 pandemic on the evening of 20 March.
The government introduced a three-month rent forfeiture moratorium in March, which prevented landlords from repossessing commercial properties where tenants were unable to pay their rent.
However, Downey said feedback from the industry, and his own experience, suggests the majority of landlords are still expecting the next rent instalment to be paid on 24 June – by which time bars will have been closed for more three months.
“With very few exceptions what we’re hearing is that 95% of landlords are insisting on full rent in June,” Downey told The Spirits Business. “Or there are some that have said don’t pay quarterly, but pay monthly. There are some enlightened and supportive landlords, like Shaftesbury that have been good and said, look, the next three months can be rent-free and let’s talk about stuff again in June.”
The governing body of the Square Mile, City of London Corporation, was one of the first organisations to introduce rent deferrals for either the March 2020 quarter or June 2020 quarter, providing they belonged to a specific set of sectors (including food and beverage). Tenants can repay the deferred quarter’s rent over 12 months from the end of September 2020 to the end of September 2021 – and no late interest will be charged.
The body is due to review the measures at the next property investment board meeting on 26 May.
When asked by The Spirits Business whether the company is considering a six-month rent holiday for tenants, a City of London Corporation spokesperson said: “We are considering a range of options to provide further support to our tenants through the current Covid-19 pandemic. A decision will be made by our elected members in due course.”
Landlords refuse to budge on payments
Downey has run Milk & Honey from its Soho venue for 18 years and has paid almost £3.9 million (around US$4.9m) in rent over that period, he said. The annual rent payment is £210,000 (US$264,000).
But although Downey has been unable to operate his bar since mid-March due to the Covid-19 lockdown, his landlord is still expecting the next three months of rent to be paid in full in June.
“We wrote to our landlord saying we’ll probably be closed for six months, what can you do to help? And they’ve come back saying they still expect basic rent and insurance to be paid,” Downey said. “We can’t pay rent on a site we can’t operate from. Plus the landlord owns the building outright, yet they still expect full payment.
“The government has helped with the job retention scheme and the business rates break, but none of that is enough to enable most businesses paying significant rent to open and pay their arrears. You can’t take six months of work out of the year and still expect us to pay rent.”
Downey has campaigned to introduce a #NationalTimeOut for help hospitality venues and landlords. The initiative would see bars and other on-trade establishments granted a non-government-funded nine-month rent holiday that could save more than two million jobs.
It would also enable landlords to push their loan repayments back for nine months, and extend each corresponding lease by nine months so that payments aren’t lost, just postponed.
Now, Hospitality Union is urging members of the trade and consumers to write to their local MPs to ask them to support a #NationalTimeOut. A template letter is available on the Hospitality Union website.
Furthermore, Hospitality Union has created a short video outlining its campaign objectives, which warns that without additional government support “we risk unimaginable job losses in the next few months”.
In addition to the nine-month rent break, the #NationalTimeOut campaign also includes extra measures that would ensure hospitality jobs and businesses would be protected for the foreseeable.
This includes the removal of the £51,000 (US$64,000) cap for rateable value cash grants and a reduction in VAT for hospitality businesses for when they’re allowed to reopen.
“If we don’t get an extension on the lease moratorium or a time out, we’ll have to give the keys back,” Downey said. “It is devastating, but it’s more devastating for the staff that work there who would lose their jobs. There’s nothing I can do about it.
“I can’t pay that landlord that money when we can’t open. I’ve just got to think about how we can limit the impact and how can we re-employ some people if that’s the case, and keep the campaign going.”
Downey said while he could not yet reveal many details, the campaign had “got right into the heart of government” and discussions were ongoing.
Social distancing won’t work for bars
The UK government is due to give the nation an update on lockdown measures next week, as the current three-week lockdown period will be up on Thursday 7 May.
UK prime minister Boris Johnson has promised to deliver a “comprehensive plan” next week on how the lockdown measures may be relaxed once it is safe to do so, after declaring the UK is “past the peak” of the Covid-19 outbreak.
However, with social distancing measures likely to be in place until a vaccine is found, Downey warned it is even more important the government extends support to on-trade venues who will continue to be hit hard by coronavirus long after lockdown is lifted.
“If we’re told to reopen with social distancing measures, at Milk & Honey it makes it impossible; it’s too small, too enclosed,” Downey explained.
His Street Feast company operates four additional London venues, including Dinerama in Shoreditch.
“Dinerama, that’s a 1,000-capacity venue with 400 seats and 600 standing,” he said. “So Dinerama won’t be able to open until the new year. We might get a few weeks, or nights before Christmas, but if people are staying away because of fear of the virus then 50% capacity of 50% sales levels means you’re massively loss-making – you might as well hand back the keys.
“Until we get a vaccine there’s no way out for pubs, clubs, bars and proper restaurants to operate. At Milk & Honey, if we drop 10% capacity, we’re losing money. At Dinerama, we can take 20%, but it’s different for all businesses.
“I think generally, the industry says a restaurant that drops 20% is losing money, a pub that drops 30% is losing money, but it will be different from venue to venue.
“We’re expecting 50-70% drops because people will stay away due to fear when we reopen. Everyone will be loss-making. There needs to be more support to help businesses like us keep going, keep people employed, well after lockdown is lifted.”