Despite calls from Dubai restaurants urging landlords to provide rent relief to help them navigate challenging economic times on the back of the coronavirus pandemic, F&B boss Mansour Bin Jabr says it’s overheads that will affect the industry’s fine dining venues.
A partner at hospitality company 4-Front Facilities, which operates casual concepts like Mr Miyagi’s and and El Chapo’s Tacos, he says upscale restaurants will face millions in losses over the lockdown period.
“Fine dining… these guys are really hit hard. It’s not the real estate that’s going to kill them. It’s the overheads. Because the real estate, you’re paying AED2-3 million and the landlords will say, ‘alright, because of coronavirus, I’m going to give you 25% off and you’re only going to pay AED2 million.’ So it’s not going to affect you much,” Bin Jabr says.
“But what’s going to kill you is when you have highly paid European waiters who you’re paying AED13,000 per month, when I’m only paying AED2,300 a month; it’s not going to hurt me. They’re paying 10 times what I’m paying in monthly salaries, especially when you have a general manager, for example, whose salary is AED80,000. So you’re going to end up paying AED200,000 in 2-3 months and you’re hit hard because you have millions in losses. I don’t see how you can recover from that,” he adds.
Bin Jabr’s venues are currently relying on delivery for revenue, and have seen a 25% increase in deliveries since the lockdown measures were introduced in March. While it’s not enough to sustain the business in the long run, he says the drop in sales will not kill casual dining concepts.
“We had a great year anyway. We will see a slight drop but it’s not going to kill us. It’s affecting the whole world and it might affect our top end revenue at the end of the year but it is what it is. The whole world is facing this issue.
“We are depending on delivery. We always had it but there’s an increase, we saw 25% increase on our deliveries,” he says.
Government sector landlords will ultimately provide some relief, according to Bin Jabr, and will waive rent or offer discounts.
“We’re talking to landlords to give us a grace period and they’re understanding, especially that the government will push them to, and most are government-owned. They will waive the rent, they’re already in talks and have instructions from the government to support the private sector… We’re talking 25% [discount] from now to June,” he says.
As for landlords in the private sector, he says restaurants can have “a landlord sent from hell” or a landlord “with a good heart who will understand your situation.” Either way, he believes it’s “all in the hands of the landlords.”
“Three months can really affect your revenue, especially that the majority restaurants in Dubai are operating on breakeven, just to keep their face and ego attached to the brand. These ones will take a massive hit,” he says.
‘We’re closed’
Dubai-based Bulldozer Group, which operates fine dining concepts like Cipriani and Gaia, temporarily closed its restaurants until further notice, but said it will re-open all of its venues “as soon as it is possible to do so,” and is working on a plan to introduce delivery to its outlets.
“With all of our projects, we like to take the time to research and plan properly before moving into production,”group chairman Evgeny Kuzin tells Arabian Business.
“We are currently working on the technology and logistics for a service that delivers high-quality cuisine and would prefer not to rush this process. Deliveries will be available as soon as we are certain that the level of service we can provide matches the experience guests can enjoy within our venues,” he says.
But there will be casualties, according to Kuzin, referring to restaurants facing a high risk of closures as a result of measures taken to curb the spread of Covid-19.
“Sadly, it is not realistic for us to expect everybody to recover. I hope that things return to normal as soon as possible, to reduce the risk for restaurants across the region… During times of uncertainty, our focus turns to our goals and priorities. It’s almost like we have taken a cold shower or woken up and realised what is most important, ” he says.
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