Food & Drink

Rent crisis: the ‘single biggest issue’ facing bars

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Colossal hire money owed weigh heavy across the neck of the hospitality business. If the scenario shouldn’t be resolved, there may very well be far-reaching implications for future generations within the bar world, writes Amy Hopkins.

Rent debt

With out authorities intervention, hire debt may put 330,000 extra jobs in danger on high of these misplaced in 2020

*This function was initially revealed within the June 2021 subject of The Spirits Enterprise. On 16 June 2021, the UK authorities introduced an additional nine-month extension on industrial eviction safety

The devastation wrought by the coronavirus pandemic on the hospitality sector is borne out in information from commerce physique UK Hospitality: over the course of 1 horrible 12 months, 660,000 jobs have been misplaced, gross sales of £86 billion (US$122.3bn) have disappeared, and at the very least 12,000 companies have completely ceased buying and selling.

One determine that continues to climb is the collective hire debt accrued by the sector for the reason that first nationwide lockdown in March 2020. At the moment, the debt sits at an infinite £2.5bn, in accordance with UK Hospitality, whose latest member survey discovered that greater than half usually are not capable of pay their arrears.

At first of lockdown, the UK authorities introduced a lease‐forfeiture moratorium to stop landlords from evicting industrial tenants for non‐cost of rents. The moratorium has been prolonged a variety of instances, and is because of finish on 30 June 2021.

In the meantime, tenants and landlords have been left to return to their very own preparations as regards to repayments. Nonetheless, numerous discussions have hit an deadlock, with UK Hospitality estimating that 40% of enterprise house owners haven’t been capable of agree a hire concession with their landlords.

“Some landlords have taken a collaborative and supportive strategy, however we’ve additionally seen a big swathe of landlords reject this strategy and be heavy handed and aggressive. The time has now come to get this subject sorted,” says UK Hospitality CEO Kate Nicholls.

As such, the group is looking for “sustained and focused intervention” from the UK authorities to assist each events attain an settlement. “So far the federal government’s technique – introducing and repeatedly extending a ban on enforcement motion – has simply kicked the issue down the highway,” provides Nicholls. UK Hospitality and different voices have warned {that a} “massacre” of closures can be inevitable if the disaster shouldn’t be resolved, putting a further 330,000 jobs at risk.

Following the federal government’s name for proof on industrial hire money owed, UK Hospitality submitted a variety of proposals to safeguard the business, all grounded within the precept that the monetary burden brought on by the pandemic needs to be pretty shouldered by each landlords and tenants.

Particularly, the group needs to see: current protections prolonged and expanded; at the very least 50% of hire debt accrued throughout enterprise closures written off, and at the very least 25% written off for the durations when companies operated beneath Covid‐19 restrictions; and for landlords and tenants to agree cheap reimbursement phrases.


It’s not but recognized if lawmakers will heed the recommendation. Within the meantime, enterprise house owners wait on tenterhooks. The prospect of paying out such hefty prices whereas persevering with to function beneath authorities‐mandated restrictions has left many in a state of tension, frustration and disbelief. For some, any affirmative motion can be too little, too late.

“I’ve misplaced my whole enterprise,” says Jonathan Downey, who opened London cocktail establishment Milk & Honey virtually twenty years in the past. In a heartbreaking transfer that reverberated all through the business, Downey closed the esteemed Soho bar final September after 18 years of operation. He additionally completely shuttered his road meals venues Big Robotic, Dinerama and Hawker Home, whereas his Mannequin Market enterprise will stay afloat till the tip of September.

“By then, I’d have misplaced every thing I’ve ever inbuilt hospitality,” says Downey, who blames hire debt for every closure, calling it the “single greatest subject” going through the business.

Over the course of twenty years, Downey paid virtually £4 million (US$5.7m) in hire to Milk & Honey’s landlord, “however they might not comply with a pound of arrears being written off; nothing”, he says.

Over the previous 12 months, Downey has grown what began out as a WhatsApp group right into a foyer organisation referred to as Hospitality Union. By way of this he launched the #NationalTimeOut marketing campaign, which calls on the federal government to legislate for a nationwide system of turnover hire, that means zero hire for the durations of no turnover through the pandemic. “[The government needs] a rare response to extraordinary circumstances,” says Downey. “They should be imaginative and artistic, they usually simply haven’t performed something… and what they’ve performed, they’ve performed badly.”

Downey believes that if landlords usually are not pressured by laws to just accept drastically decreased phrases, “they’ll by no means agree offers”. By way of Hospitality Union, Downey has heard quite a few tales of callous behaviour by landlords, and even threats of violence. He hopes the brand new organisation will provide a platform for small enterprise house owners who typically lack negotiating energy and assets to affix forces and affect constructive change.

Peter Thornton, chief monetary officer of London‐based mostly reside music venue The Piano Works, is looking for the UK authorities to undertake Australia’s hire‐aid mannequin, which operates on a precept of proportionality.

Just like Downey’s turnover hire proposal, this may imply hire aid can be proportionate to the tenant’s discount in commerce, with hire waivers constituting at the very least 50% of the overall hire discount.

“Lots of industrial companies are opening in an unsure surroundings, which may show to be difficult for money stream, whereas additionally coping with the stress of potential landlord motion to repay hire arrears,” says Thornton. “We aren’t asking for additional help by the federal government, however we’re asking for a good‐for‐all and mandated resolution to the hire drawback that ensures landlords and tenants work collectively… and share the burden of the pandemic, by which case the Australian hire‐aid mannequin can be a powerful, viable resolution.”

In the meantime, within the US, mass hire debt can be an ongoing concern for hospitality venues, and companies must cope with a fragmented state‐by‐state strategy.

“Lease debt, and the specter of it, has pressured the closure of hundreds of bars, a lot of them icons in their very own communities,” says Aaron Gregory Smith, govt director of the US Bartenders’ Guild.

Smith provides that whereas many states handed anti‐eviction ordinances for residential renters, the identical was not true for industrial premises. As such, “many bars needed to discover inventive methods to herald cash to cowl their hire obligation all through the pandemic”.


It’s rapidly changing into obvious that the hire disaster is having an excellent deeper influence within the business; now that restrictions are easing within the US, the UK and different markets, Smith notes that swathes of companies are going through employees shortages after shedding or furloughing staff to cowl hire prices. “Had hire aid been an choice, it’s fairly potential everybody can be working at high staffing ranges now,” he says.

Downey notes that sooner or later, the sector may undergo from an absence of funding if potential enterprise house owners view hospitality venues as “dangerous” property that “may very well be closed down at any time, via no fault of [their] personal”. As well as, hire money owed and different challenges arising from the pandemic have “postpone lots of people from working within the business [because] these jobs usually are not as safe as we as soon as thought they had been”.

In the long term, Smith believes the present disaster may result in fairer relationships between landlords and industrial tenants. “We’re hoping that sooner or later, whether or not or not the hire money owed subject is well resolved, landlords develop into far more empathetic companions with the companies they lease to.”

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