Hospitality hopefuls hungry for deal
As some Wellington hospitality businesses hit the wall in difficult times, new operators are seizing the opportunity to pick up prime locations.
Turnover of tenancies in the central had ramped up this year after a prolonged quiet period, said David Grant, of Crown Commercial – one of Wellington’s leading commercial real estate firms.
There were upsides to the closure of businesses, for those keen to jump in.
“We’ve been doing quite a few hospitality deals because while some might find it a bit tough in this market, it’s actually a good market for those who want to step in because they are going to potentially inherit a full fitout that they don’t have to pay for,” Grant said.
“And they can get a site they otherwise wouldn’t have been able to if they were in a strong market.”
The Post has previously reported on a raft of hospitality businesses closing as market conditions slowed down.
Grant said they had been setting up new tenancies for cafes, bakeries, bars and restaurants across the city. “There is still demand there. Whilst for some people it’s tough, on the flipside it presents an opportunity for the next person coming in and we’ve been very active in that market.”
A couple of high-profile restaurants that closed recently, such as Shepherd and Field & Green, now have new hospitality tenants for their prominent locations. In Lyall Bay, new owners are opening a cafe and restaurant at the former Elements site in late May.
Sahil Bogal is one such owner who believes it is a good time to find top quality sites in the city to bring new offerings. He is opening a fine dining Indian restaurant and whisky bar called Dine Divine on the former site of Shepherd on Eva St, scheduled to open in July. “We love that location. It’s a little hidden, but that’s what we want. We want to build that curiosity in people, so that as customers are coming they can spread word of mouth and people start looking for us.”
Bogal understood the hospitality industry was tight right now. “The time is never good, so we have to make it good. I know that we’ll make it work because of the quality that we are going to bring. If you want to grab the right location, this is the right time.”
He is also opening a bar on Ghuznee St called The Cocktail Corner on the site of what was formerly Humdinger.
Some owners of strong established brands are selling their businesses as going concerns. For example, a group of three bakery cafes on “high-profile sites” in different parts of central Wellington for sale give a glimpse of market conditions.
Selling for $299,000, their marketing said they were profitable with combined sales revenue of more than $4 million a year.
Though the name of the bakeries was not disclosed, the advertisement gives a clue to the difficulties they were facing with wage costs having an impact on its current profitability and that it was a challenging time in industry.
“This should be a highly profitable enterprise, but circumstances have meant that wages are running high here,” the advertisement said. “You do need the skill and experience to run this sort of operation. Whilst there are talented staff on board, this is not for the inexperienced or faint of heart.”
Another listed is an “Italian-style takeaway pizza business in the heart of Te Aro, Wellington”, selling for $795,000, and boasting weekly sales exceeding $29,500. There’s also a “leading craft brewery” in Upper Hutt for sale for $1.75m, or a “globally renowned hospitality franchise”, using an image resembling a Subway sandwich, on the market in central Wellington for just under $1m.
Jeremy Smith, of hospitality group Trinity Group, said the soft market meant prices of many businesses were lower.
“I’m sure there are a number of businesses that would love to sell but given that most hospo companies are struggling, the price you can get for a business is really not worth selling at this point in time. If you’re in the market and you’ve got some money you can pick up some good deals but you’re going to have to work damn hard to make a buck.”