According to Business Insider, Spur restaurants has told its landlords that they will not reopen at the end of the lockdown, calling it “commercial suicide”.
Spur group’s COO Mark Farrelly, reportedly said in a letter to its landlords that, Rocomamas burger joints, all Spur and Panarottis restaurants will remain closed as long as they face restrictions on the number of customers and alcohol sales.
“The restricted trade was so injurious that the lockdown almost came as a relief as the cost of individual closures was preferable to the hideous trading losses our franchisees were incurring,” Farrelly wrote.
“On average, our turnovers dropped over 70%, and it proved impossible to run a viable business with the restrictions in place.”
Farrelly continued saying, Spur was not going to have its franchisees take on the cost of reopening after lockdown, “only then to sustain catastrophic losses.”
Unlike other retailers and restaurants, Spur did not say when it would reopen, instead, they told customers they’ll “be updated”.
Landlords were reportedly also not informed by Farrelly as to when groups may start trading again.
“One of our major concerns is that we are going into winter (the flu season) and rightfully, people will continue to be alarmed by anyone coughing and sneezing,” he said.
Once Spur does open again, landlords could expect no more than 6% of turnover as a rental payment, at a time when business “will initially be diabolical”.
Landlords need to remember that Spur restaurants are good for shopping malls, he said.
“We will not grant a franchise on any site driven to closure by unrealistic landlord expectation.”
Spur has more than 600 outlets and its franchisees reportedly employ more than 30 000 people directly.