The on-trade is in a cash flow crisis right now and banks and insurance companies need to alleviate the pressure by turning on the taps immediately, writes restaurateur Mike Turner. A co-owner of French restaurant La Ferme in London’s Primrose Hill, Turner shows how the devil is in the detail of recent financial promises – both by the government and by financial institutions. Although he is optimistic that his business is eligible for financial aid, there is plenty of room for pessimism – the rateable value ceiling of £51k, banks looking for personal guarantees, and insurance companies trying to default on technicalities, is detracting from where our real focus should be, which is on helping people cope with the virus.
“Where we’re at right now is that there should be money around for everything we need,” writes Turner. “The most important thing for us right now is that our staff should be getting some wages from one scheme. As long as they’re fed and watered and under a roof then everything else is secondary.”
Two and a bit years on from opening a restaurant in central London and I’ve finally come to the conclusion that, for someone with my inability not to take everything personally, running a restaurant is horrible. Unless you’re an extreme optimist, or you shit money, then it’s a long hard slog to keep the wolves from the door until your daily practicalities work themselves out and cash flow catches up to your break even.
My saving grace has been that I am only one of a team of business partners, and with the fabulous efforts of JF and the staff, chef Guillaume, hospitality entrepreneur extraordinaire Francois, and latterly my amazing and calm wife helping out, La Ferme in Primrose Hill has slowly edged its way to break even and more, now in a position to pay off supplier balances and look forward to the future.
So hard to be an optimist in this game
A pessimist like me can be a tough person to have around when times are good. I try and let people get on and enjoy the good times, and hopefully only subtly warn against what might be round the corner. Weird thing though is that when things do come round the corner, I’m not really surprised and usually in a position to think clearly for a solution.
With a restaurant it can be the most stupid little things. I remember last year when a little old local battle axe complained about something on our terrace which meant we lost the use of our outside space for July and August whilst the council sorted themselves out. Not ideal, but after two hours of swearing we got a plan in place and got each other through it. It showed even a pessimist like me that this business had every chance, and by the turn of 2019/2020 even I was thinking what had seemed just 12 months earlier relatively impossible.
So I guess what I’m saying is that Coronavirus and its impact on our business and the world economy is clearly my fault. I allowed myself to become optimistic and someone, somewhere, wasn’t having that. It’s like as I mentioned to Richard Siddle, every time I watch Liverpool FC on telly or listen on the radio, they lose. So I just haven’t looked for a year and a half. True story! I clearly wield that kind of cosmic power, and so must take a large chunk of responsibility for the current issue we’re facing.
The timeline in the last two or three weeks has been a bit of an emotional rollercoaster for everyone from every walk of life. To talk solely about the impact on the restaurant seems small-minded in the extreme, but given this website is for the hospitality and on-trade industries, I guess you’ll forgive me.
As soon as BoJo opened his mouth, probably by mistake at the time, and told people to stay away from restaurants, bars, and pubs, the ticking time bomb to save our industry, let alone my small restaurant, was on. Insurance companies refused to pay out as Covid-19 wasn’t a named disease on anyone’s policies and the government hadn’t forced anyone to close. Boris’ funding links with the Institute of British Insurers was not lost on anyone on social media at this point. We were all staring down the barrel for those 24 hours.
Next day, however, up stood Rishi Sunak and delivered the life raft we all needed. OK, critics will say that they’re loaning us the money that they took away from us, but I’m not having that at all. We need to social distance, the health situation far exceeds the hospitality industry, we needed to close. The industry had been saved for now.
The devil is, however, always in the detail
No rates for a year was a welcome sound, but being told that the £25,000 grant was for any site with a rateable value of under £51,000 was a bitter pill for us. We’re in one of the most expensive parts of London, and even though we’re a small independent business, we’re above that threshold. No dice for us I’m afraid.
The government loans available through a number of banks is again something that on paper sounds amazing. But again, let’s look closer. A number of banks have been caught holding desperate business owners to personal guarantees tying their business and personal livelihoods inextricably together. Even the few that haven’t, the bank we’re speaking to being one, have sent over 13…count them, 13!!…forms and hoops and hurdles to prove that you’re eligible.
Oh, and the insurance company are still refusing to pay out on any technicality they can discover in the docs. They’re talking out of their arse. We know, and most in the same boat as us know, that we’re legally covered. But getting these people to part with the money? Wow, that’s not going to be easy. Lawyers across the globe are going to be having it away in the aftermath of all this.
Where we’re at right now is that there should be money around for everything we need. The most important thing for us right now is that our staff should be getting some wages from one scheme. As long as they’re fed and watered and under a roof then everything else is secondary. But with everything else? I’m just unbelievably lucky that we’ve got a team of people looking at all the minutiae involved. My life, it was just me? The door would be shut and stay shut.
We’re in very special times for the world right now, and it’s right that most of our attention is on doing the right thing. We should be self-isolating, being there for the most vulnerable in society, and supporting our healthcare professionals in the fight against this outbreak.
But in the back of your mind you know it’d be nice to know that there will be a job for us all to go back to in June or July or whenever it might be. There should be some money somewhere, but getting hold of it is going to be as tough as it’s ever been, and until that bottle neck is cleared, the flow down to suppliers and landlords and all else involved is going to be stunted. Let’s hope the banks and insurance companies, now with plenty of government backing, open the taps soon and alleviate the pressure.
Stay safe, stay healthy, stay lucky.