Restaurant Industry Asks Government for 9-Month Rent Holiday to Stay Afloat

A campaign group supported by some of the biggest and most well-known restaurant chief executives in the U.K. has today asked the government to consider a nine-month rent-free period, in order to safeguard businesses in the aftermath of the coronavirus (COVID-19) pandemic. It markets the proposal as a National Time Out.

The letter, written by Hospitality Union founder Jonathan Downey, is co-signed by the bosses of Dishoom, Hawksmoor, Gordon Ramsay Restaurants, JKS Restaurants (Gymkhana, Lyle’s, Bao, and more), Nando’s, Burger King, and Caravan, among others. It sets out a proposal for an extension to the government’s rent relief period for restaurants, pubs, and cafes, as well as emphasising why the hospitality sector is a special case. Hospitality Union describes itself as “an action group of more than 2,600 hospitality owners, senior operators and other professionals.”

The rent break period for the industry is due to expire at the end of June, but the letter recognises that such short-term relief fails to acknowledge the length of time it will take for any semblance of normality to resume in restaurants, that there is no certainty of a return to business as usual. The industry was the first and hardest hit, but it will be the last allowed to reopen, the letter points out.

As such, the letter argues that relief measures into 2021 will be necessary for businesses incapable of generating revenue in the age of lockdowns and social distancing. One insight agency says its research has found that 87 percent of restaurants would not survive without a nine-month rent-free period. The proposal to the Treasury says that normal rent payments should resume at the end of March 2021, covering the three months prior.

Critically, the letter also seeks government cover for landlords. If restaurants are permitted to withhold rent payments to landlords, the proposal suggests a “matching loan and interest payment postponement for landlords, as well as protection for them from covenant breach and debt security enforcement.” To protect tenants from heavy handed landlords demanding payments or using other means of enforcement, the government must recognise the economic ecosystem of restaurants, whereby in the majority of cases the landlord is kingmaker, the proposal argues. It also suggests that the nine months’ rent could be made up, with “each corresponding lease extended by 9 months (if the landlord chooses/elects to.)”

The letter also emphasises the economic case: the hospitality industry is responsible for one in 10 jobs in the U.K.; the proposal, since it is not in the form of grants or direct payments like the expensive Job Retention Scheme, “will cost the taxpayer nothing.”

It concludes that “something is desperately needed” and that this proposal will “protect countless businesses and save millions of jobs.”

The industry is hoping that the government responds to the proposal this week.