Monday May 25, 2020

Brody Sweeney: State help is needed to rescue restaurants

Even when the hospitality sector reopens, it will take a long time for business to return to normal. The Save our Restaurants Coalition has proposed a three-step plan

29th April, 2020
Ukiyo restaurant on Exchequer Street in Dublin is boarded up as a result of the Covid-19 crisis but bears the hopeful message “We’ll be stronger”. Photo: Leah Farrell/RollingNews.ie

It‘s only in the last few weeks that those of us working in the hospitality sector have begun to realise that the end of lockdown restrictions won’t mean the end of our problems, but rather the start of them. As one restaurant owner put it to me this week, “I’m more scared of re-opening than I was of closing”.

Currently, about 80 to 85 per cent of of our restaurants in Ireland are closed or effectively closed. While there are some amazing entrepreneurial efforts by individuals, they are at best keeping the lights on and making people feel that at least they are doing something. Our industry employs in the order of 80,000 workers – 80 to 85 per cent of whom are furloughed or out of work.

The realisation that has dawned on the industry is threefold. Firstly, overseas tourism has stopped, and depending on how long it takes to get going again, this will have a significant impact on restaurants in tourist towns such as Killarney and Galway, never mind bigger cities such as Cork and Dublin.

Secondly, social distancing is here to stay until a vaccine is developed – maybe two years – and so even if a restaurant is able to re-open, it will only be able to use, say, half its seats.

And thirdly, we now have a nervous public who may take some time to get used to the idea that it’s safe to mingle with strangers again.

When you put these three factors together, we have a realistic expectation that business will return slowly, and take two years or more to recover properly. Half-full restaurants are not viable when their cost base was founded on them being full.

Our government is in a very difficult situation, and while many would feel the management of our country has been pretty good throughout the crisis so far, the problems are only getting bigger.

Every vested interest is coming to the government with their hands out seeking help for their legitimate interests. Tax revenue has largely dried up, just as the demands on the exchequer are ballooning at an unprecedented rate.

Along with many others in our industry, I have proposed extensive state intervention to keep the sector going while the recovery takes place. This will cost serious money, and many will argue (correctly in normal times) that it’s not the job of the state to prop up private company losses.

But here’s the thing. If the government chooses not to intervene, it’s going to endure a hit to the state’s finances anyway from the cost of increased social welfare payments, together with the reduction in Vat and employment taxes. At least with intervention, we keep the jobs with all the social benefits for our people, our villages, our towns and our cities.

The Save Our Restaurants Coalition has submitted a three-point “step down” plan, which looks for support in the three most significant areas of a restaurant’s costs: occupancy (including rent and rates), bank repayments and labour.

On occupancy, we have asked that the government subsidises costs for viable restaurants for two years post-lockdown on a scaled basis depending on turnover.

On repayments, we have outlined how lenders should agree to reschedule the payment of loans, finance leases, hire purchases and mortgages for two years in cases where businesses are unable to meet current debt obligations.

On labour, meanwhile, we have asked that the government continues with the existing employer supports, but that these are reduced as business improves.

You can access the full three-step plan here

Brody Sweeney is the founder of Camille, the restaurant chain, and a founding member of the Save Our Restaurants Coalition

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