Deliveroo teams up with industry experts to accelerate recovery of restaurant sector
Deliveroo convenes legal, property and restaurant industry specialists to help the restaurant sector navigate the challenges facing the sector, including practical considerations with rent negotiations and lease restructuring
Leading restaurant CEOs, including Joe Grossman, founder of Patty & Bun, cite the project as a “potential lifeline” as many face huge financial challenges
Deliveroo, law firm Goodwin and leading F&B property consultants, Shelley Sandzer, have produced new, practical guidance for restaurants and landlords to find mutually agreeable solutions to the current challenges in the restaurant sector
This comes as Deliveroo unveils new research to highlight the impact of COVID-19 on restaurant partners, which shows nearly 50% of small and independent restaurants say they will go out of business within 1- 3 months if the current situation persists
Deliveroo will call on the UK Government to take action on rents to support the restaurant sector
Source: Deliveroo
Deliveroo has brought together legal, property and restaurant industry specialists to help the restaurant sector accelerate the pace of recovery.
Both restaurants and landlords face unprecedented challenges and huge uncertainty. Restaurants are concerned about being able to pay rents in the face of a prolonged reduction in dine-in sales, an unpredictable regulatory environment and lower consumer spending. Landlords are concerned about the future financial viability of their restaurant tenants and whether they will be unable to collect rents in future.
As a first step to help the sector overcome this, Deliveroo has brought together Shelley Sandzer, the leading specialist advisor in the restaurant and leisure property sector in the U.K, and Goodwin, a global law firm with market-leading real estate and restructuring teams, to produce practical guides for restaurants and landlords, covering:
The current legal position between landlords and tenants. This looks at the limits of existing statutory protections, which are temporary and do not reduce the amount of overall rent tenants have to pay despite their income having been severely reduced.
Practical considerations with rent negotiations and lease restructuring. This looks at how different lease models can be renegotiated, advocating that landlords and tenants work collaboratively to identify mutually agreeable solutions to their lease negotiations in the COVID-19 era. The paper discusses rent holidays, rent reductions, inclusive rents or limits on service charges, turnover rents and increased lease durations as potential solutions.
Issues facing operators with reduced turnover. This explores the wider implications facing restaurants with cash shortfalls.
Guiding principles to negotiations and a checklist for tenants. Shelley Sandzer has developed the 3Cs guiding principles to aid operators and landlords in negotiations: ‘collaborate, co-operate and compromise’. Deliveroo and Shelley Sandzer have also co-developed a checklist to help restaurants manage their finances and also be able to share clear information with landlords on their cost pressures to aid negotiations.
Joe Grossman, founder of Patty & Bun, commented: “We welcome this initiative by Deliveroo, Goodwin and Shelley Sandzer. Many F&B operators are facing what seems like insurmountable challenges as they try to rebuild their businesses, so the ready availability of advice, guidance and support from a diverse range of experts is a potential key lifeline. All sides of the industry need to work together to recover, and this initiative will help achieve that.”
Alongside creating new tools to support restaurants and landlords, Deliveroo will also be calling on the Government to take urgent action to support restaurants unable to pay their rents due to the impact of COVID-19. The Government has previously put a temporary ban on evictions by landlords of businesses, but this moratorium is due to come to an end in June, so Deliveroo will be asking Ministers to take further action.
This comes as research from Deliveroo shows that:
Nearly 50% of small and independent restaurants say they will go out of business within 1- 3 months if the current situation persists.
27% said they did not believe they would go out of businesses as a result of coronavirus (with the rest of respondents saying they can last 3-6 months under the current lockdown requirements).
The main barriers are making enough profit are social distancing measures remaining in place (75%) and being able to pay rents in the near future (66%).
Will Shu, CEO and founder of Deliveroo, said: “Deliveroo is passionate about supporting our restaurant partners and we are committed to supporting them through this unprecedented time. We are pleased to work with cross-industry experts to create much-needed solutions for restaurant partners and help accelerate the recovery of the restaurant sector we all value and want to see thrive again.”
Matthew Pohlman, Real Estate Partner at Goodwin, said: “In a time of unprecedented strain in the global hospitality sector, it is a privilege to collaborate with Deliveroo on this important initiative to help promote solutions for the restaurant sector and accelerate the pace of its recovery. Our efforts are focused on providing practical, balanced and actionable insights to help drive discussions among all stakeholders towards mutually acceptable solutions to the present challenges in the sector.”
Duncan Lillie, partner, Shelley Sandzer professional services, added: “This is a re-set moment for the relationship between operators and landlords, one that requires collaboration, co-operation and compromise on all sides. By working together in a more open way than has been the norm in the past, the sector can rebuild. More than that, it can do so in way that will achieve much greater long-term sustainability and success for operators and landlords alike.”
Ends
Notes to Editors
Data source:
This is a survey of independent gold, silver and bronze restaurants, over 2000 global respondents, with 482 from the UK.
Data collected between 21st and 24th April.
Further detail about the checklist
To aid operators and landlords alike in their negotiations, Shelley Sandzer has prepared the following checklist:
Take the initiative as most landlords will not have a full comprehension of a tenant’s business model as rents invariably reflect the market tone
Where possible, be open. Disclose your business plan/road map. This should include the assumptions adopted to underpin the P&L over the next two to three years. This may include a change in the business model, such as new menus, takeaway, use of vouchers, sale of home packs etc…, accompanied by a P&L that shows the extents to which efforts have been made to reduce costs
Allow the landlord to test the plan. At this stage, landlords should be encouraged to share their own road map with you too. This is an essential and very important part of the process as, without the three Cs of collaboration, cooperation and compromise, we will not see a way through these difficult times
Compromise on both sides will be required as there is a strong case for the introduction of turnover rents even in situations where commercial rents have been the norm
To ensure a meeting of minds, landlords and tenants need to work towards a return to the “new normal”. This is likely to return to pre-coronavirus rents in possibly year two, but more likely year three