A long-time Queenstown restaurateur says a lot of money was made in his sector by stretching the rubber band, “but now it’s broken”.
Blue Kanu co-owner Grant Hattaway predicts the local scene, for those who reopen, will be “super-competitive”.
He says the average pre-Covid-19 net profit was only six per cent.
“I’ve spoken to lawyers and accountants and they’re stunned when I say that.”
And that six per cent was based on $30 to $40 mains diners now mightn’t have the stomach for.
Hattaway has a warning for restaurants who opened their venues this week for takeaways, as allowed under Alert Level 3, many for the first time.
“The margins on takeaways are very, very small, and if you’re seen to be operating, even if it’s unprofitable, certain landlords may deem that as, now you can pay me rent’.”
Then, if Level 2 kicks in mid-May, allowing restaurants to open, Hattaway observes “in the 20 years I’ve been here, that’s the quietest time of the year” – and that was when people could still travel here.
“Not only do you have to start the payroll, you have to start buying product, and the issue is a lot of us need to buy fresh product.”
If an a la carte restaurant can’t do 50 covers a night, maybe you’re better staying closed, he suggests.
Hattaway’s asking for “a total reset” from landlords and suppliers.
“Going forward, rents should be variable, based on a percentage of the month’s turnover, because whatever the business did previously is irrelevant.
“I don’t know yet, but I’m sure at best-case scenario it’s still going to be social distancing, sign-in at the register, put some sanitiser on your hands, throwaway menus and payWave – it’s not really conducive to a great night out, is it?”
He says he’ll only know if he’s carrying too many staff – who will all benefit from this month’s rise in the minimum wage – once he reopens.
“I hope [our sector] doesn’t do some seriously heavy discounting or it’s going to be a race to the bottom.”
Russell Gray, CEO of Good Group, which owns Queenstown’s highly-regarded Botswana Butchery and White + Wong’s, as well as three bars, hopes they can all reopen around May 18, assuming we’re at Level 2 by then.
“It’s very clear the hospitality and tourist market will have shrunk dramatically, and therefore we will need to right-size our business accordingly.
“I think the biggest impact is going to be on the numbers of staff required to run your venues – we’ll have to downsize by at least a half.”
Initially, there’ll be slightly cut-down versions of their formerly-large menus, though that’ll be reviewed monthly.
“I think if businesses work with banks, suppliers and landlords, and have a solid, robust plan, they’ll get through the other side, but it’s going to be a tough time.”
Gray’s a board member of Hospitality New Zealand, which is urging the government to reopen the border with Australia once Covid-19’s under control in both countries – “it’s better to be a market of 30 million people, than five million”.
Mike Burgess, who owns the popular Winnies restaurant/bar, Ballarat, some Searle Lane bars and Frankton Arm Tavern, says the short term’s going to be “incredibly tough”.
“We’re just trying to look at all our businesses and try and evaluate whether they’re going to be viable in the new world.
“We’re confident enough of them will be.
“Some of them won’t be, so we are considering the possibility of having to pivot them to what the new market’s going to demand.”
That could include adjusted hours and days of trade.
Davey McKenzie, whose hospo interests include Atlas, now doing takeaways and deliveries, Ivy and Lola’s and Arrowtown’s Bendix Stables, plans to open them all as soon as he can, but is still working on various scenarios for them.
“It will be hard, real hard, but I haven’t worked for 17 years to not plan and get this sorted.”
