140 jobs to go in Bewley's due to excessive rent

CrazyRabbit · 06-01-2015 3:00pm #1

http://www.rte.ie/news/2015/0106/670590-bewleys-grafton-street/

I've never been in the cafe, so can someone please explain how a single cafe can have 140 staff?

The owners are saying that rent is double the market rate (€1.5 million) and that this is the main reason behind these job loses. Personally, I think the rent is excessive.
It's not the first time a shop has been driven out of business due to greedy landlords taking advantage of lax laws on rental agreements. In a local shopping center, all the shops have a 'no decrease' lease, meaning that rent can be increased, but never decreased. So many shops are stuck paying boom-time rents or just have to shut down. I personally know of 3 shops in the center that had to close due to rent costs.

So what do you think? Are business rents too high or is this just poor management by Bewleys (140 staff!!)?

Menas · 06-01-2015 3:05pm

CrazyRabbit wrote: »

http://www.rte.ie/news/2015/0106/670590-bewleys-grafton-street/

I've never been in the cafe, so can someone please explain how a single cafe can have 140 staff?

The owners are saying that rent is double the market rate (€1.5 million) and that this is the main reason behind these job loses. Personally, I think the rent is excessive.
It's not the first time a shop has been driven out of business due to greedy landlords taking advantage of lax laws on rental agreements. In a local shopping center, all the shops have a 'no decrease' lease, meaning that rent can be increased, but never decreased. So many shops are stuck paying boom-time rents or just have to shut down. I personally know of 3 shops in the center that had to close due to rent costs.

So what do you think? Are business rents too high or is this just poor management by Bewleys (140 staff!!)?

It is a massive cafe...multiple floors and counters. Open all hours. So yes, 140 staff seems reasonable.

The rent thing - I dont know. But what confuses me is that they are saying they need to close for 6 months to do renovations to reduce their floor size.

Does not compute.
1) Wont they still be paying the same rent post renovations?
2) Paying 140 staff redundancy is expensive.
3) Closing with no income for 6 months is a big loss of revenue.

SEPT 23 1989 · 06-01-2015 3:06pm

crippling commercial rates also are a factor in many of these shop closures

Jester252 · 06-01-2015 3:07pm

A little bit of both. 140 staff for one coffee shop is ott and the building is not worth 1.5 million per year

Buona Fortuna · 06-01-2015 3:08pm

Whilst the rent thing is crazy, I'd be surprised if that was the whole thing.

140 staff at €15k pa is €2.1M so that could be part of it, especially as they are planning to refurbish / downsize.

Daith · 06-01-2015 3:09pm

Trigger Happy wrote: »

2) Paying 140 staff redundancy is expensive.

They're probably not all entitled to redundancy though?

listermint · 06-01-2015 3:10pm

Buona Fortuna wrote: »

Whilst the rent thing is crazy, I'd be surprised if that was the whole thing.

140 staff at €15k pa is €2.1M so that could be part of it, especially as they are planning to refurbish / downsize.

Yes but 1.5 Million Per year on Rent. I mean.... come on.

Frigga_92 · 06-01-2015 3:11pm

There is also a theatre upstairs and the cafe opens at 8am until 10pm most nights.

I really like Bewleys cafe, hope this doesn't spell the end of it altogether.

Menas · 06-01-2015 3:13pm

Jester252 wrote: »

A little bit of both. 140 staff for one coffee shop is ott and the building is not worth 1.5 million per year

140 staff is not OTT though.
They are open 14 hours per day seven days a week. 40 staff per shift and a few more for saturday/sunday busy times. Take in holidays/sickness and you have on average 35 staff working at any given time.
35 staff over three floors, 6 cashpoints, 2 (I think) kitchens....thats not OTT IMO.

Buona Fortuna · 06-01-2015 3:18pm

listermint wrote: »

Yes but 1.5 Million Per year on Rent. I mean.... come on.

Did I not say it was crazy or did you not read my post before you quoted it?

Falcon L · 06-01-2015 3:18pm

Staffing level doesn't seem all that high to me. As a previous poster pointed out, they're not all on at the same time. As for the rent... I wouldn't mind being the landlord.

JJayoo · 06-01-2015 3:25pm

Is 140 the total staff count? or is that just the number they are letting go?

Falcon L · 06-01-2015 3:28pm

JJayoo wrote: »

Is 140 the total staff count? or is that just the number they are letting go?

I'm sure that's just about the total staff. They'll probably all be let go for the duration of the refurb.

Smiles35 · 06-01-2015 3:32pm

Falcon L wrote: »

I'm sure that's just about the total staff. They'll probably all be let go for the duration of the refurb.

They will. And 70 coming back when they re-open according to the radio this morning.

BeerWolf · 06-01-2015 3:34pm

Rent is €1.5m a year... what ?!

Bootros Bootros · 06-01-2015 3:47pm

Rent in Grafton Street is upwards only mostly

AndyBoBandy · 06-01-2015 3:49pm

Isn't yer man Jonny Ronan the landlord for this building?

he who owes millions to NAMA

Geuze · 06-01-2015 4:00pm

BeerWolf wrote: »

Rent is €1.5m a year... what ?!

Yes, nearly 29k per week, about 4,100 per day.

The landlord is Ickendel Ltd, which is controlled by Irish property developer Johnny Ronan, whose loans are held by the National Asset Management Agency.

This issue went to court, over an interpretation of UORRs.

http://www.irishtimes.com/business/retail-and-services/new-look-bewley-s-goes-back-to-its-roots-1.2055720

"A third-party arbitrator established a market rent of €728,000 in January 2012. Bewley’s was successful in the High Court but lost on appeal last year in the Supreme Court."

Grayson · 06-01-2015 4:12pm

Geuze wrote: »

Yes, nearly 29k per week, about 4,100 per day.

The landlord is Ickendel Ltd, which is controlled by Irish property developer Johnny Ronan, whose loans are held by the National Asset Management Agency.

This issue went to court, over an interpretation of UORRs.

http://www.irishtimes.com/business/retail-and-services/new-look-bewley-s-goes-back-to-its-roots-1.2055720

"A third-party arbitrator established a market rent of €728,000 in January 2012. Bewley’s was successful in the High Court but lost on appeal last year in the Supreme Court."

Most of the properties there have an upward only rent agreement.

I'd imagine they're renting per floor so the upper levels will become available for rent. also it's probably two units so it might be half the size when looking at it from the front post renovation.

DeJa VooDoo · 06-01-2015 4:15pm

listermint wrote: »

Yes but 1.5 Million Per year on Rent. I mean.... come on.

Didn't FG promise to abolish upward only rental agreements?

whisky_galore · 06-01-2015 4:17pm

DeJa VooDoo wrote: »

Didn't FG promise to abolish upward only rental agreements?

FG promised lots of things.

floggg · 06-01-2015 4:21pm

listermint wrote: »

Yes but 1.5 Million Per year on Rent. I mean.... come on.

I don't know what conparative rent rates are for properties of that size, but it's a fairly huge building in a prime spot.

Also given that it's always full, I would say they wouldn't be doing all that bad even at that price.

K-9 · 06-01-2015 4:21pm

DeJa VooDoo wrote: »

Didn't FG promise to abolish upward only rental agreements?

I'm not sure, I think they could only bring it in from a certain time frame, not retrospectively.

The thing is, the head of Bewley's was on the radio this morning saying they took a court case and the judge agreed with them on the rent, but they still couldn't get the it reduced. I presume the contract was water tight or something like that.

Muahahaha · 06-01-2015 4:23pm

DeJa VooDoo wrote: »

Didn't FG promise to abolish upward only rental agreements?

They certainly did. And then they washed their hands of it. In fact I think the guy who owns Korkys Shoes on Grafton Street launched a huge campaign against upwards only rents and in the heat of the 2011 election Enda or some other Fine Gaeler stood on Grafton Street and declared that once in power they would put an end to upward only rent reviews. Wouldn't mind seeing that vid again, it was akin to Ruari Quinns moment when he stood shoulder to shoulder with the students and promised not to hike the registration fees for third level and then within eight weeks of getting into office in the Dept of Education he did exactly what he promised not to do.

DeJa VooDoo · 06-01-2015 4:28pm

K-9 wrote: »

I'm not sure, I think they could only bring it in from a certain time frame, not retrospectively.

The thing is, the head of Bewley's was on the radio this morning saying they took a court case and the judge agreed with them on the rent, but they still couldn't get the it reduced. I presume the contract was water tight or something like that.

Bewelys should just close down, take their name and trademark with them, and locate somewhere else.
Let the people who own the building board it up or accept the market rent of the day from someone else.

Falcon L · 06-01-2015 4:31pm

DeJa VooDoo wrote: »

Bewelys should just close down, take their name and trademark with them, and locate somewhere else.
Let the people who own the building board it up or accept the market rent of the day from someone else.

How long have they been at that spot? It must be a very long time.

K-9 · 06-01-2015 4:34pm

DeJa VooDoo wrote: »

Bewelys should just close down, take their name and trademark with them, and locate somewhere else.
Let the people who own the building board it up or accept the market rent of the day from someone else.

Yep, that was suggested to him on the radio and he said they'd considered it.

Falcon L wrote: »

How long have they been at that spot? It must be a very long time.

Probably the big reason they didn't move.

whisky_galore · 06-01-2015 4:34pm

DeJa VooDoo wrote: »

Bewelys should just close down, take their name and trademark with them, and locate somewhere else.
Let the people who own the building board it up or accept the market rent of the day from someone else.

Yup, and Grafton St can be Anystreet Europe, filled with generic multi national outlets.

Wossack · 06-01-2015 4:37pm

Falcon L wrote: »

How long have they been at that spot? It must be a very long time.

1927

They closed in 2004, bought out and reopened 2005 by the guys who own Cafe Bar Deli, who also inherited the pretty awful rent agreement. (Rent payable is at last years rate, or current market rate, whichever is higher - or words to that effect).

Height of the boom, 2007, rent doubled from 700k to 1.5m..

and its been that since.

They'd been trying to fight it in court, but it got overturned towards end of 2014, so guess the inevitable had to happen

Highflyer13 · 06-01-2015 4:41pm

Wossack wrote: »

1927

They closed in 2004, bought out and reopened 2005 by the guys who own Cafe Bar Deli, who also inherited the pretty awful rent agreement. (Rent payable is at last years rate, or current market rate, whichever is higher - or words to that effect).

Height of the boom, 2007, rent doubled from 700k to 1.5m.. and its been that since.

They'd been trying to fight it in court, but it got overturned towards end of 2014, so guess the inevitable had to happen

:eek: Jesus thats a ruthless hike, they must have been raking it in to even agree to that.

Mr. Incognito · 06-01-2015 4:43pm

The facts are that the Rent has an upwards only clause.

The rent was adjusted upwards in line with the lease.

The tenants agreed a rent holiday in the bad times.

When things picked up the landlord wanted his back rent that he said he was owed.

The High Court said that the lease could be interpreted to say that the preceding period meant the initial period.

This was widely seen as bad law and was rightly overturned in the Supreme Court on the Construction of the lease. Preceding period means the last rent review date.

The Supreme Court could sympathise with the High rent but the tenants signed the contract and were, and are bound by it. The court cannot amend stupidity but that's what was agreed at the time by them and they are bound by it.

Now NAMA are the landlords. There is nothing to stop them from agreeing a reduced rent and accepting less and not strictly enforcing the quantum of the lease but there are knock on consequences if they do this as other leaseholders will start screaming that they did it for Bewleys so why cant they have a knock down rent.

NAMA may have sold the loans off- I haven't been following what they have done with their portfolio but a lot of Developers are getting funds to purchase their loans at knock down prices and run the assets for them as all they are concerned about is the return or the yield at the end of the day.

140 staff seems like a lot and personally I will be shocked if they don't go into liquidation as who can afford to pay that level of rent with no income

140 jobs to go in Bewley's due to excessive rent

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