Hospo group pulls the plug

The collapse of a group of central Christchurch eateries is the first in a stream of small-business failures expected to be triggered by the Covid19 lockdown.

Now in liquidation are the three linked companies behind restaurants Sister Kong Bao Bao and Sister Kong Beer and Dumplings, both in Victoria St, and Salut! Salut! and Bar Yoku, both in Welles St.

Owners Sam and Sally Hooper said the lockdown and expected financial downturn meant they had to pull the plug, and experts say they are just the start. Former All Black Andy Ellis was an unofficial partner in establishing Bar Yoku.

The directors of a handful of other Christchurch companies, including retail fitters UPD Shopfitters (2018) Ltd and construction project managers Future Foundations NZ Ltd, have fully or partly attributed their liquidations in the past week to the lockdown.

Prime Minister Jacinda Ardern said yesterday that the Government was ‘‘looking at measures’’ to help struggling businesses whose landlords would not reduce rents, possibly in line with moves under way in Australia.

Government measures already in place include the wage subsidy, while a debt hibernation scheme has been announced but not yet made into law.

Christchurch receiver Geoff Brown, of insolvency firm Rodgers Reidy, said his office had taken many calls during the lockdown and was now starting to get liquidations.

‘‘We’re expecting to see a lot more hospitality and retail businesses go into liquidation,’’ he said. ‘‘We certainly expect that when the wage subsidy starts running out, we will see a surge then too.’’

Brown said Christchurch companies were especially vulnerable.

‘‘Businesses in Christchurch have been affected tremendously; with the earthquakes some of them have just been getting back up and running.

‘‘Then to have another crisis hit like this – for a lot of businesses it will be too much.’’

The Hoopers made the decision to liquidate their own three businesses, Hoop Group Ltd, Yaki Welder Ltd, and Hoop Victoria Ltd. Creditors include staff, Inland Revenue, ACC, and food and drink suppliers.

The couple launched Sister Kong in 2017 as a Hong Kong-inspired

‘‘Businesses in Christchurch have been affected tremendously; with the earthquakes some of them have just been getting back up and running.’’

Geoff Brown of insolvency firm Rodgers Reidy

restaurant, then added their second on the same street in March this year.

Their two Welles St business, Japanese-style Bar Yoku and tapas restaurant Salut! Salut!, opened late last year as part of The Welder hospitality and retail complex owned by developers Box 112.

Sister Kong announced at the start of the level four lockdown its plans to sell meals through home delivery or pickup, but the Government then outlawed all eateries from trading until the shift to level three.

Sally Hooper said they had found the squeeze tough, especially as some of their businesses were only a few months old. ‘‘We had hoped they could be around for many years to come.’’

Hooper said the ‘‘very saddening’’ and ‘‘humbling’’ decision to close their doors and liquidate was hard to make, but they felt it was better for their creditors and staff than delaying.

With the coming of winter and the uncertain economy, they expected ‘‘impacts to hospitality for potentially many months to come’’, she said.

Economist Cameron Bagries, of Bagrie Economics, said that without cash coming in small businesses would be failing even at level three or two.

‘‘New Zealand has never experienced the speed and the sharpness of a downturn like this. Businesses are going to be in difficulty if they don’t have a cash buffer, and a lot of SMEs [small and medium businesses] don’t.’’

Bars and restaurants would be especially vulnerable as people losing jobs would have less discretionary money to spend on extras, he said.

The number of collapses would mean stronger businesses would benefit by reduced competition when they were allowed to trade again.

‘‘There will be two types of firms – the hunters and the hunted.’’