Supermac’s slowly reopens as funds play rent hardball
SUPERMAC’S boss Pat McDonagh says that in a best-case scenario the restaurant chain is likely to see just 70pc of its pre-Covid business return.
Nevertheless, he said that the business — with its potential for drive-thru and delivery orders — was in a better position than many restaurants where social distancing was going to be a very difficult challenge.
The Supermac’s boss told the Sunday Independent that a general review of rents was badly needed for the entire sector or “a lot of businesses will fold”.
Some international property funds that had acquired sites in which Supermac’s had outlets “were refusing to play ball” on rent reviews and were threatening legal action to enforce rents, he said.
Supermac’s has done deals with some of its landlords, as well as with its own franchisee tenants, to pay 50pc of monthly rent. Supermac’s has also allowed its own franchisees an initial two-month break on rent. But a number of its own landlords had issued legal letters in response to the proposal, he said.
“Some of them [the landlords] are very, very understanding and you can deal with them on the basis that you agree a percentage. Some of them are kind of sitting on the fence. And then there’s the 20pc who are not listening, not taking no for an answer.
“The ones that are particularly avaricious that may have a couple of sites that they bought and they’re the most difficult to deal with,” he said.
Insurance was an increasing issue for businesses too, with premiums going up, he said.
“It was unsustainable up to now, and I know a lot of people who aren’t bothering reinsuring, which is a dangerous situation.
“But, as I say the premiums were unsustainable up to now but I think in some cases they are nearly impossible now for businesses to be able to pay,” he added.
McDonagh said the new government — whenever it was formed — would need to have “a certain representation from business owners and from small business because they are going to be the pillars of the future for the country”.
The next government must focus on SMEs as the path to recovery, he said, adding they had been ignored in favour of promoting foreign direct investment.
“SMEs around the country have been neglected or forgotten about in the last couple of years when you’ve heard all about foreign direct investment. Now we’ ll really see the soldiers standing up who will lead the battle forward.
“No business in this sector is coming back to 100pc of what they were taking prior to this. At best you’re talking 60pc or 70pc,” he said.
The falloff in trade will see some Supermac’s outlets close for the foreseeable future with potentially 10pc of restaurants not reopening. To date the chain has reopened 75 of its approximately 110 outlets.
“If a vaccine were found and things were happening again you would certainly relook at those. But there is no point opening them if you are going to lose money,” he said.
“In some cases it won’t be worthwhile depending on the location. It’s interesting that the outlets that were busiest before the recession are now the quietest, say in the city centre locations because there is nobody practically in the city centre. When that opens up they will come back.”
But McDonagh said business in general must ultimately take a positive approach and “learn to live with [the virus] and survive”.
“And then hopefully, if they do find a vaccine things will come back.
“But it will take a few years. This isn’t an overnight or a year-long thing.”