Life on the edge: Auckland restaurateurs open up about lockdown
Tuesday, 31 August 2021
Auckland restaurateur Tony McGeorge’s businesses were just about back to their pre-Covid financial position when the latest outbreak was detected.
“We hadn’t quite paid back some GST we had deferred,” McGeorge said.
Lockdowns hit the hospitality sector hard, and cafe, restaurant and bar owners are calling for targeted government support to recognise that their financial sacrifices in the fight against covid are among the very highest.
Weakened by the March/April lockdown last year, and the August level 3 restrictions that followed, the August move to alert level 4 this year, has left many in a parlous state.
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* Restaurants want immediate Govt support through lockdowns
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The Restaurant Association says within a week, three-quarters will no longer be financially viable.
McGeorge said many people didn’t understand how fast hospo businesses burnt through their cash reserves in a lockdown, and how long it took them to claw their way back to profitability.
“The amount of cash we had in the bank has literally halved,” he said.
“We thought we had a pretty decent amount of money in the bank, but it all disappears very quickly as soon as you are not getting any cash in through the door.”
The cash burn was spread across four restaurants he owned with his wife Krishna Botica: Cafe Hanoi, XuXu Dumpling, Saan, and Ghost Street.
“It’s pretty painful stuff,” McGeorge said.
The wage subsidy helped, and was a psychological lifeline for business owners, who cared deeply about paying their staff.
But wages were not the only overhead that had to be paid, even when revenue had fallen to zero, McGeorge said.
Landlords had been willing to help in the first great national lockdown, but not all were in a position to be able to do so, McGeorge said.
Even once an area moved out of alert level 4, the climb back to profitability was slow, he said.
“Our experience of level 3 is we were at 10 per cent of revenue. At level 2 businesses we operated at 50-70 per cent,” he said.
He predicted that if the lockdown in Auckland was not extended past the next two weeks, income would not bounce back to normal until mid-November.
Business owners had survived previous lockdowns, so they had a better idea of what’s coming than when New Zealand first went into alert level 4 in March last year.
But the Delta variant was a wildcard causing extra concern, because it was so highly infectiousness, bringing a heightened threat of further outbreaks.
“If there was another sudden outbreak in November, and it damaged November, December trading, it would be calamitous,” McGeorge said.
The six-week Christmas period was a critical time for hospo businesses, usually representing their busiest time of the year.
Another lockdown would find hospo businesses seriously weakened, McGeorge said.
Even when cashflow was back to normal, hospo businesses would not replenish their cash reserves immediately, or quickly, as deferred tax, deferred rent, and other emergency business debt taken on to survive lockdown had to be paid back.
McGeorge expected many hospo businesses to come out of the current lockdown so weak they might have to cut staff, and the hours they operated, unless the Government heeded calls for targeted support for them.
Simona Vasile opened her Italian trattoria in Auckland’s Newmarket shopping hub on March 1 last year, and just three weeks later, the country was in lockdown.
It was a blow, which was followed by a fight to get staff, which brought her business to the point of closing.
Publicity highlighting her troubles resulted in a remarkable turnaround for her business, but no sooner was it ticking along, Auckland was plunged back into alert level 4.
Vasile is in a much better place than she was in the 2020 lockdown.
“I can’t complain. I think people this time are more optimistic than before because we know this time we are locked up for a few weeks, and then we go back to normal,” she said.
“It's really hard right now,” she said.
But, she said, eradicating the Delta variant of Covid was needed for people to get confidence to dine out again.
“I prefer four weeks of sacrifice,” she said.
She was enjoying one aspect of lockdown: being able to spend more time with her family, after an intense period working all hours to keep her business.
LOCKDOWN HISTORY
Auckland has been hit hardest with lockdowns thanks to it being the home to so many MIQ facilities, and its large, dense population.
March 19, 2020: Indoor gatherings of 100+ people banned. Borders shut to all but returning citizens and permanent residents.
March, 21: Country moves to alert level 2.
March 25: At 11:59pm, Country moves to alert level 4.
April 27: Country moves to alert level 3 at 11:59pm.
May 13: Country moves to alert level 2 at 11:59pm.
June 8: Country moves to alert level 1.
August 12, 2020: New Covid cases prompt Auckland region moves to alert level 3. The rest of New Zealand moves to alert level 2.
August 30: Auckland moves to alert Level 3 at 11:59pm.
September 21: All regions except Auckland move to alert level 1 at 11:59pm.
September 23: Auckland 2020 moves to alert level 2.
October 7: Auckland moves to alert level 1 at 11:59pm.
February 14, 2021: Fresh Covid cases. Auckland moves to alert level 3 at 11:59pm. The rest of New Zealand moves to alert level 2.
February 17: Auckland moves to alert level 2 at 11:59pm. The rest of New Zealand moves to alert level 1.
February 22: Auckland moves to alert level 1 at 11:59pm.
February 28: Auckland moves to alert level 3 at 6am. The rest of New Zealand moves to alert level 2.
March 7: Auckland moves to alert level 2 at 6am. The rest of New Zealand moves to alert level 1.
March 21: Auckland moves to alert level 1 at midday.
June 23: Wellington moves to alert level 2 at 11:59pm.
June 29: Wellington moves to alert level 1 at 11:59pm.
August 17: All of New Zealand moves to alert level 4 at 11:59pm.