Covid 19 Delta outbreak: Bars and restaurants at crisis point as concern over lockdown conditions mount
An Auckland pub owner is pleading for more support from the Government, saying a lot of hospitality businesses aren’t going to survive the latest lockdown.
Steve Gillett, who owns popular sports bar and restaurant The Kingslander near Eden Park,has written a letter to Prime Minister Jacinda Ardern and his local MP, Melissa Lee, saying hospitality businesses simply can’t sustain prolonged periods of lockdown while level 2 conditions are too tough to operate in.
While extra resurgence support payments announced on Friday will help, it’s not enough, said Gillett, who has owned and operated The Kingslander for 16 years.
“I consider myself a fair person and never a person that expects handouts but as business owner I find it increasingly hard to keep my business afloat when Government aims to cripple our hospitality industry, which has already been put to task over the last 18 months,” Gillett said.
“I respect the decisions of wage subsidies and resurgence support and thankfully have received them to keep my business afloat.
“But with a business that has a capacity of holding close to 400 people, a function room that caters for over 100 people the 50-person cap is not even going to cover our running costs. Expectations from our landlord is that we are back and trading at level 2, but with capacity level slashed to 50 people we can’t possibly turn over the sales to cover our expenses let alone reach our break-even.
“What’s the point of trading at a loss, we have already drained our hard-earned savings of the pre-lockdown. We are haemorrhaging cash weekly as rates, insurance, power, subscriptions and licencing are ongoing.”
He said he paid $47,000 of GST and PAYE at the end of last month with no income for more than three weeks and even if Auckland moves into level 2 no one knows how long that could be for.
“This is OK if level 2 doesn’t carry on for too long but we would need to be at 66 per cent of sales to compare to wage subsidy at level 3 and 4.”
“We will hit level 2 without a wage subsidy for our 20 employees and add that to the weekly outgoings. Not being able to reduce hours as our team have minimum required hours and with extra table service required, as everything is seated, we need to provide the extra staff.
Business advocate Phil O’Reilly said the Government needs to urgently sort out more help for Auckland businesses.
“To use a sporting analogy, for a business person a big lockdown is like getting kicked in the shin,” he told the Mike Hosking show on Newstalk ZB.
Auckland businesses had been kicked in the shin five times.
O’Reilly said the Delta variant had changed everything – so it didn’t make sense for government support for business to be at the same level as last year.
“I just don’t understand that. So businesses are once again hanging out there, particularly those small cafes and entertainment centres that are so important to the vibrancy of Auckland City, they’re hanging out there to dry.
“The Government needed to look at something other than the wage subsidy – which in itself was a great idea.
“It’s looking after staff – it’s not looking after the business’ balance sheet, their rental payments and so on.”
On Friday, the Restaurant Association and Hospitality New Zealand met with Finance Minister Grant Robertson to discuss further targeted financial support.
Hospitality New Zealand chief executive Julie White said a crisis was at the doorstep and extra resurgence payments announced Friday will not be enough to save many businesses.
“I am holding my breath with a heavy heart.
“We are devastated, they [ministers] were really empathetic [but] they didn’t recognise the gravity of the situation.
“We are literally asking for three months’ support, this is going to change lives and livelihoods,” she said.
On Friday, Robertson said he was aware of the difficulties facing businesses currently. In particular, those in Auckland were “doing it tough” for the rest of the country, he said.
The second payment of the wage subsidy remained open, and if Auckland stayed at level 4 or 3 next week that would trigger another round of wage subsidies.
A second round of resurgence support payments would also open, Robertson said.
Businesses need to demonstrate a 30 per cent drop in revenue over a seven-day period.
This could cost up to $430 million and there would be further assistance after that package too, Robertson said.
White said the ministers got a clear and unequivocal picture of the losses being borne by the industry but they could not promise targeted support.
“The Government is not offering anything equal to the deep financial crisis the hospitality industry is in.
“At stake is the wellbeing of families of operators and staff, and their suppliers, and the customers who want the businesses to operate.
“Our need is uniquely desperate. Levels 2 to 4 are periods of 30 and 100 per cent losses for most hospitality and accommodation businesses.”
There has been a little bounce-back under level 2.5, with cancellations going right through to Christmas and most of the business will be trading at a loss even with wage subsidy and resurgence payment.
“We need a payment targeted especially for our industry because we’re the hardest hit by policies designed to cut socialisation,” she said.
White said the core problem is uncertainty about how long the industry would have to operate with restrictions that prevent them from breaking even.
“If businesses had a date to aim for, they could borrow and operate tightly to reach it.
“But the lack of a plan or a target means banks don’t lend, debtors don’t roll over debt, and customers don’t make bookings.
Restaurant Association chief executive Marisa Biodis said the meeting was “good” but no outcome was decided and more research was required.
“We got a bit of homework to do, in terms of how targeted assistance might look like, and report back to the ministers,” Biodis said.
“We haven’t been given a no or a yes … so I take that as a good thing,” she said.
Biodis said they were going back to the ministry as quickly as next week but after doing some homework.
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