Once Upon A Time...
Once upon a time there were two farms that both had a golden goose. Every day the golden goose would deliver the golden egg and the farms became richer and richer as the years went by.
The first farmer respected the goose and patiently waited each day for the golden egg to come and made sure that the goose had a good place to sleep and that it was fed well and was grateful each day the egg came.
The second farmer however became impatient and one golden egg a day wasn’t enough. He tried to find places where he could get more geese in order to have more eggs but with no success. Feeling this sense of despair he decided that the only way to accelerate his need for eggs was to kill the geese and take all the eggs. Tears of horror when he opened up the geese he found no eggs.
We all know this parable and it really is the overarching story of the central London restaurant market . The restaurant and hospitality sector is the golden goose. Londoners still want to eat out and know that they can’t buy a dinner at Novikov on Amazon and therefore the eating out scenes there have been stronger. New and innovative concepts continue to pop up, creating new jobs and bringing colour and culture to the Capital City. Some landlords recognise the need to look after these operators by ensuring that rents and lease terms remain fair but others are in too much of a hurry and to an extent are trying to kill 'the goose that laid the golden egg'. As was recently reported widely in the survey that we did, covering over 250 restaurants, 85% of restauranteurs in London recognise they need to change their models to some extent mainly due to the fact that over 34% of all operators are now paying over 20% of their rent in turnover which clearly is unsustainable.
At this stage of the economic cycle it is important that landlords stand up and talk to their tenants and communicate in a way which takes out the adversary historic discussions to ensure that tenants can make money and landlords can get paid their rent. The landlords that do this have happy, successful businesses and I fear that the ones that simply apply unsustainable rents will eventually regret having done so.
We all want growth and there is nothing wrong with it but it has to be based on reality. We truly hope that landlords will start having more sensible discussions over the coming weeks and months with a view to ensuring the long-term growth of our wonderful restaurant and hospitality sector in London.
David Abramson, CEO Cedar Dean Group