Thursday September 24, 2020

Domini Kemp: Reopening our restaurants feels impossible

Our company contributed more than €1m to the exchequer in 2019 and employed about 150 people. We need state supports if we’re to reopen

13th May, 2020
Domini Kemp: ‘Forcing us to close and then to limit sales will be like death by a thousand cuts.‘ Picture: Fergal Phillips

When my company started the soul-destroying process of closing our 13 restaurants and cafes on Friday, March 13 (of all days), I was still largely optimistic. “This will blow over soon enough” was my overwhelming feeling.

The doom and gloom, and predictions of plague-like deaths, seemed ridiculous in this world where brilliant scientific solutions are swiftly found and implemented. How could something that was – initially, at least – comparable to the flu put us out of work for anything more than a few inconvenient weeks?

But as it soon became clear to all of us that business was going to be clobbered, fear and dread crept in. Trying to find creative solutions feels impossible when you’re letting 150 staff go.

Closing up a restaurant is not as simple as pulling down the shutters. Kitchens are like mini-factories, so everything had to be cleaned down, the fridges emptied, stocktakes done, and food distributed or frozen down. There was the added frustration that the fridges were utterly full – we had been busy preparing for the St Patrick’s Day tourist influx when the lockdown happened.

Orders were cancelled, but some supplies arrived anyway. One friend found herself the recipient of many loaves of sourdough bread left outside the Commons on Stephen’s Green as she walked by.

Arrangements were made to spot-check each premises, and to make sure we didn’t lose further stock. Frantic calls were made to insurance companies to see if we’d lose cover because the business wasn’t operating, just as home insurance would be lost for an abandoned home.

When we analysed our accounts, it was clear that the slowdown had taken hold from mid-February, when we pay off the massive bills from Christmas and enter our leanest period of the year. By that fateful Friday the 13th, sales were already down by 50 per cent. And then we had to close.

Uncharted waters

It feels wrong to be shouting about the inequality and financial unfairness of it all, and selfish to highlight our livelihood woes in comparison to people’s lives. With this virus, most of us accept that we’re in uncharted waters, and that the draconian measures taken have undoubtedly saved lives.

But we also know this has come at a cost to society that will be felt for years to come, including, of course, other much-needed medical treatments being put on hold.

Many food businesses have pivoted to online and creative meal solutions for pick-up. They have done a brilliant and beautiful job of adapting, but some are quietly concerned that they are losing money despite their best efforts.

It may be some time before we know what we did wrong, how we could have done it better and – most importantly – how we might do it better next time. Because there will be a next time.

So the task of getting businesses reopened with enough cashflow, as well as real and meaningful supports, is going to be critical. If distancing measures are in place which means we can only accommodate 50 per cent of our usual numbers, it won’t be sustainable for eat-in restaurants to reopen, unless they can charge double. And how many cash-strapped customers are going to be willing, or able, to pay that?

Right now, it feels like the bigger corporate giants have more sway and swagger when it comes to accessing supports – Shake Shack, the US-listed burger chain, was recently pressured into returning funds it received as part of US government schemes.

This crisis has not been caused by mismanagement. No one is at fault for it. We have not been the authors of our own fate, and the government must avoid prolonging this slump. Austerity is not the antidote.

The government can borrow internationally at well below 0 per cent and pass on this advantage locally. It can refinance its own debt and save even more in the process. And it can return some of what we paid over the last year.

In 2019, our company contributed more than €1 million to the exchequer between Vat, rates and PAYE contributions, and paid nearly €1 million in rent. We employed about 150 people.

Freezing rates for several months and offering €250 million in loans or an extra bank holiday are pointless. We need sector-specific supports that include a refund on last year’s Vat (to be used as working capital) continued employee supports, a freeze on rates and a simple and swift mechanism to deal with fixed costs in this new world of 80 per cent less revenue.

The Restaurants Association of Ireland has clearly indicated that nine out of ten Irish restaurants are at high risk of not reopening. Even when the lockdown ends, fears will persist and sales will be down. We can see that in China and Sweden.

Opening in those circumstances is unworkable. It would be better to pull the plug now and ride this out until vaccines, opportunities and customer confidence are all in supply.

We’ve done our figures and are busy planning a sensible way out because, as entrepreneurs, that’s what we do: we’re a hardy bunch. We tackle challenges head-on and usually love the fight. But for the first time in 20 years, this fight feels impossible. How does a business defeat a virus?

Sometimes, the right thing to do is to walk away from a bad deal. If nine out of ten restaurateurs are forced to do that, then 108,000 jobs will be gone. And €1.48 billion a year will need to be paid out in wage supports, versus the €378 million our industry contributes to the exchequer in payroll and tax receipts.

Governments and central banks can print money, and that’s what this crisis requires. They need to act as insurers against the business interruption they have imposed on us, and compensate appropriately so we can reopen and get back contributing. Forcing us to close and then to limit sales will be like death by a thousand cuts.

While our entire industry will work hard to ensure we keep our staff and customers safe, we have to be realistic about what can be achieved. Social distancing, two-metre gaps, personal protective equipment and perspex barriers are not the hallmarks of top-class hospitality.

Domini Kemp is a chef, food writer and managing director of the Itsa Food Group

Share this post

Related Stories

The Dublin distillery recorded profits of €1.6 million last year as revenue rose to €18.2 million

Barry J Whyte | 1 day ago

Achill Island Sea Salt produces three different types of hand-harvested salt sourced from the Atlantic

Elaine O'Regan | 4 days ago

Publicans and restaurateurs fear Friday’s restrictions may be the final nail in the coffin for the beleaguered industry

Aaron Rogan | 4 days ago