Having negotiated rent reviews and lease renewals in the hospitality industry for over five decades and throughout the recessions of 74, 84, 94 and 2008, I thought I had seen it all. But, I have never witnessed anything quite like this.
In times of economic crisis, we always switch our team into corporate rescue mode. This began in earnest in early March, when a club owner called me in despair saying he had only taken £12,200 that week – down from £160,000 normally. His questions were simple: how would he pay his landlord his rent? How could the business carry on?
Since then, our phones (and Zoom line) haven’t stopped ringing with calls from tenants with similar worries about how they will make rent payments given the forced closures and no income.
Much of our work has adjusted to virtual conversations. There’s no doubt that it makes negotiating harder as there is nothing quite like meeting someone in person, but it does mean that we’re able to hold more conversations through the day – which has been invaluable.
The early period of the crisis can be summed up as one of frustration with most landlords (not all) initially failing to acknowledge that operator issues were their problem. As we’ve progressed over the recent months, many are beginning to understand that without engagement and assistance, liquidations will be rife – which will damage them and the industry.
Experience counts in these negotiations, and having handled four previous recessions, I understand that this is a matter of striking balance between landlords’ and tenants’ positions. My team and I have been spending the days encouraging dialogue and compromise on both sides to find workable and realistic solutions that won’t leave landlords with empty properties.
Absolute transparency is essential for successful negotiations, so we have been helping our operator clients give an accurate picture of the prospects they face, by opening their books and explaining plans for returning to profitability. Sensible landlords are now listening to these concerns and are beginning to strike deals.
We also have a number of landlord clients and are conversely working with them to understand the position of their operators and proposing appropriate solutions accordingly.
I have also been helping friends in the industry with some of the great campaigns that could support the industry from the ‘UK’s Grand Outdoor Summer Café’ calling for streets to become al fresco dining spaces to ‘National Time Out’, which is seeking a nine-month pause on rent payment.
Sadly, we’ve already seen a number of high-profile restaurants, such as Siren at The Goring, Texture, and The Frog in Hoxton, confirm that they won’t be re-opening their doors, as a result of the COVID-19 crisis. Given the ongoing issues, they sadly won’t be the last.
The Government have sensible extended the moratorium where landlords cannot evict tenant for non-payment of rent from March to September.
The coming weeks and months will be vital for the survival of the industry and it is critical that landlords and tenants engage with one another with clarity and transparency, to find solutions that help them both through this crisis – and the Government has a guiding role to play within this.
We will continue to negotiate for good outcomes that can safeguard the future of the industry.
By Anthony Lorenz, Founder of Lorenz Consultancy